Luncheon Keynote
Dennis NicoskiA/Senior Vice President, Sales and Customer RelationsU.S. Postal Service
2
Exploring the NextGeneration of Consumer Returns
Dennis NicoskiSenior Vice President, Sales & Customer RelationsUnited States Postal Service
Return to the FutureArlington, VASeptember 20, 2018
3
EXPLORING THE NEXTGENERATION OF CONSUMER RETURNS
RETURNS ARE A NECESSITY
CONSUMER EXPERIENCE PAST, PRESENT, & FUTURE
POSTALVISION 2020/RLA: RETURN TO THE FUTURE
4
EXPLORING THE NEXTGENERATION OF CONSUMER RETURNS
RETURNS ARE A NECESSITY
CONSUMER EXPERIENCE PAST, PRESENT, & FUTURE
POSTALVISION 2020: RETURN TO THE FUTURE
5
E-commerce growth has exploded over the past few years and is poised for continued growth.E-commerce is growing
1. Retail E-Commerce Sales Report. U.S. Census Bureau. 2018. US Retail Ecommerce Sales, 2014-2020. eMarketer. May 2016. 2. “2017 Retail Trends.” Strategy& PwC. 2017. 3. “State of the U.S. Online Retail Economy.” comScore. 2018. 4. “The State of Shipping in Commerce.” Temando. 2017.
Online sales growth dwarfs that of the retail industry as a whole, with growth rates 7x that of total retail.2
7x
$1B+ days are the new norm – Cyber Monday was the highest spending day ever, exceeding $3B for the first time.3
$1B+
of retailers ship between 21 and 100 online deliveriesper week. 4% ship 10K+ deliveries per week.4
48%
$684B
$600B
$525B
$448B
$388B$339B
$297B$260B
$229B$199B
$169B
2020*2019*2018*20172016201520142013201220112010
U.S. Retail E-Commerce Sales2010 – 20201
6
45%
72%
54%
41%
Canada
UK
Mexico
Top Countries for Cross-Border Selling (from U.S.)
$1T
of global shoppers look for U.S. goods online.1 in expected cross-border B2C e-commerce sales in 2020.2
40%
44%
46%
Items that are hard to find locally
Secure way to pay
Free shipping
Top Drivers for Cross-Border Selling (Globally)
Canada and UK are top destinations for US-based e-commerce sales. Western Europe and eastern Asia are other popular destinations.3
Improvements to visibility and cost barriers are inevitable and will drive cross-border selling.3
Consumers are increasingly shopping beyond their borders, and the U.S. has become a prime destination for global online shoppers.1
Cross-border demand
1. PayPal Cross-Border Research 2014. National Retailer Federation Retail Big Show 2016. 2. Accenture & AliResearch 2015 National Retailer Federation, Retail Big Show 2016. 3. PayPal Cross-Border Merchant Research 2016 USA Report PayPal.
7
Returns have become a necessity, fueled by the growth of e-commerce, and volume will only continue to grow as online shopping lacks the “touch and feel” experience.
Returns are the new normal
1. “Riding the Returns Wave: Reverse Logistics and the U.S. Postal Service.” USPS OIG. April 2018. 3. “2017 Retail Trends.” Strategy& PwC. 2017.
Americans returned over $100B in e-commerce purchases in 2017.1
Shoppers return online apparel purchases 8x more frequently than in-store purchases.3
USPS handled 148M package returns in FY16.
In 2017, between $113B and $132B of e-commerce purchases were returned.
148M
$100B+
return rate for onlinepurchases
25% 3%
vs.
return rate for in-store purchases
8
A number of different industries must optimize their returns processes to ensure success. Returns touches everything
HOME TRY-ONWarby Parker, Stitch Fix
END OF PRODUCT LIFEApple, Dell Computers
RENTAL RETURNLe Tote, Rent the Runway
TRADE-INAsurion, Tekovery
DIAGNOSTIC TESTINGEverlyWell, 23andMe
DEFECTIVE PRODUCTSRecall Results, Stericycle
RECYCLINGAlcoa, Clover
RETURNS
9
Businesses want to meet the needs of their customers, but they also need affordable, flexible options.1
Our business customers are looking for a better experience
1. USPS Small Business Customer Survey – Returns Experience. March 2018.
of small businesses say their business pays for their
customer’s returns.
70%
of small businesses receive returns requests on a regular
basis (daily, weekly, or monthly).
55%
“
”
“I want to be able to track my return every step of the way. I want to know where
it is every time I need to track it.”
- USPS Small Business Customer
10
EXPLORING THE NEXTGENERATION OF CONSUMER RETURNS
RETURNS ARE A NECESSITY
CONSUMER EXPERIENCE PAST, PRESENT, & FUTURE
POSTALVISION 2020: RETURN TO THE FUTURE
11
The typical customer was expected to overcome lots of tiny inconveniences to satisfy an extra business expense.Returns of the past
Same channel as purchase
Provide physical receipt
Unopened package
Extra paperwork
One week from purchase
Forced to justify return
Customer pays restocking fees
12
Returns of the past
$162MDefective / poor quality
$99MBought
wrong item
1. IHL Group/Order Dynamics “Hefty Returns” WWD. July 2015. Amount of merchandise returned.
Return Reasons Across the World1
$89MBuyers
remorse
$83MFound better
price elsewhere
$64MGift returns
Yet the business may have been the cause of the return in the first place.
Same channel as purchase
Provide physical receipt
Unopened package
Extra paperwork
One week from purchase
Forced to justify return
Customer pays restocking fees
The typical customer was expected to overcome lots of tiny inconveniences to satisfy an extra business expense.
13
Every step created friction that risked losing the customer. 1
Returns of the present
1. Making Returns a Competitive Advantage. Navar. June 2017.
Same channel as purchase
Provide physical receipt
Unopened package
Extra paperwork
One week from purchase
Forced to justify return
Customer pays restocking fees
say restocking fees prevent them from
making purchase
will not make purchase if they cannot return to
store
say “no questions
asked” policy make them more
likely to buy
who returned an item were
repeat shoppersof the retailer
are satisfied with returns if the “process was really easy”
keep unwanted items to avoid the hassle of
returning them
said a 30-day return policy is
fair
22% 53% 82% 53% 62% 72% 84%
Same channel as purchase
Provide physical receipt
Unopened package
Extra paperwork
One week from purchase
Forced to justify return
Customer pays restocking fees
14
Now the customer has an easier experience with a variety of new returns options meant to keep her businesses.Returns of the present
Returns has become a competitive differentiator that businesses must use to attract and retain customers.
Return online or in store
Trial use before returning
No receipts required
Business takes on returns cost
Immediate refund
Transparent status updates
Generous return times
15
While the industry looks to the future, some businesses are stuck on present challenges.Yet returns can still be a challenge for businesses
1. Turn your reverse supply chain into a profit center. Supply Chain Quarterly. Q1 2012. 2. Reverse logistics still a puzzle for omnichannel retailers. DC Velocity. Nov 2017. 3. Recognizing Return Fraud. National Retail Federation. March 2018.*Respondents were allowed to select multiple responses. 4. Multichannel Fulfillment and Returns Survey. MetaPack. Q3 2014.
Pinched business budgetsRising transportation costs are making
businesses more price sensitive.
Complicated logisticsBusinesses invest in a complicated processing
system and then have to do it in reverse.
Drivers wantedA trucker shortage has caused freight rates to increase 28% over SPLY.
Returns are expensiveIt can cost 2-3x more to return a product than deliver the original package.1
Do-it-yourself approach64% handle some returns in-house while only 40% contract to a 3PL.2*
Inventory management struggleOnly 42% of businesses believe that they handle their returns process and technology well or extremely well.4
Guessing game27% guess or cannot measure the financial impact of returns.2
Fear of foul playFraud by bad actors is a legitimate concern. Some estimates put domestic return fraud at +$9B a year.3
Uncertain financial impactSome businesses struggle to understand how
returns impacts their bottom line.
16
EXPLORING THE NEXTGENERATION OF CONSUMER RETURNS
RETURNS ARE A NECESSITY
CONSUMER EXPERIENCE PAST, PRESENT, & FUTURE
POSTALVISION 2020/RLA: RETURN TO THE FUTURE
17
The returns ecosystem is evolving to address the increasing demand for a seamless experience.Returns of the future
• Label innovations
• Rapid refunds
• Dynamic routing
• International platforms
• Returns concierge
• Parcel lockers
• In-store returns
• Augmented reality
• Blockchain
• Artificial intelligence
DISRUPTIVE TECHNOLOGYINCREASING EFFICIENCY ALTERNATIVE CHANNELS
USPS is actively working to partner with those revolutionizing the customer experience in the Returns market.
18
INCREASING EFFICIENCY
Labels are an extra cost on retailers and consumers do not want the hassle of printing or attaching a return label.
Label innovations
Providing return labels costs $0.25-$0.40 cents per
package, whether a return is initiated or not.1
Eliminating the need for a label to return an item.
1. The Essential Guide to Retail Returns. Navar. June 2017.
Outcomes
Retailers save on label costs and can expedite reverse logistics
Customers have a more seamless returns experience
19
20
Give the customer some credit
In a recent poll of 100 leaders in online retail, 77% said speed of credit is the
most important return issue for their customer.1
Offering customers refunds before the merchant receives the return.
Consumers want faster refunds. Retailers want these customers to buy other products with their credit.
1. Turn your returns into returning customers. newgistics. October 2017.
Outcomes
Consumers no longer wait for refunds on returns
Quick credit/refunds incentivizes repurchase from the same brand
Quick credit/refunds incentivized repurchase from the same brandHarvest valuable returns data that grows revenue and reduces fraud
21
Dynamic routing
44% of U.S.-based online retailers said a rising rate of
returns has negatively affected margins.1
Flexible routing and triage that optimizes the destination of a return.
Businesses do not want to pay the costs of processing a return through their entire supply chain only to send it again to a reseller/recycler.
1. The Cost of Returns. eMarketer. March 2018.
Outcomes
Returns can be verified, redirected, and repurposed more quickly
Transportation and labor costs can be reduced on returns
Quick credit/refunds incentivized repurchase from the same brandGoods are routed to where customer demand is highest
22
International returns platforms
45% of global retail supply chain professionals cite cross-border logistics as their primary challenge.1
Offering platforms and technology solutions to process returns across the globe.
The e-commerce market is global and international returns present unique challenges to businesses.
1. Challenges that Retail Supply Chain Professionals Face. eMarketer. February 2018.
Outcomes
Offering returns is no longer a barrier to entry into foreign markets
Consumers can shop with more confidence and options
23
ALTERNATIVE CHANNELS
24
Returns concierge
71% of consumers said a positive returns experience greatly encourages them to
shop at a store again.1
Providing a service where customers can drop returns without much preparation.
Preparing and shipping returns inconveniences customers and is expensive for businesses.
1. The 4 Trickiest E-Commerce Returns Challenges – And How to Solve Them. Sidecar Discover. 2018.
Outcomes
Spares customers from the “arts and crafts” nature of prepping return
Retailers can ship returns in bulk and save through consolidation
Returns can be repurposed or recycled for restocking
25
Parcel lockers
Although 68% of online returners have shipped
items back to the retailer, 60% prefer to return items
to a physical store when given a choice.1
Conveniently located spaces for customers to securely drop returns.
Customers want more flexibility to choose where they return an item.
1. The Amazon Effect on Reverse Logistics. DRS Product Returns. January 2018.
Outcomes
Customers are able to return items at convenient locations
Provides an additional (and potentially cheaper) return option
Businesses can partner to use physical space more efficiently
26
In-store returns
Nearly 1/3 of customers say they like returning an item in-store because they can
then shop for other items.1
Offering and incentivizing quick and easy returns at the brick-and-mortar location.
Customers want the in-person assurance their return is accepted and the chance to search for a replacement item.
1. Making Returns a Competitive Advantage. Navar. June 2017.
Outcomes
Saves customers time and money on returns
Retailers reduce returns costs
Drives additional in-store foot-traffic that can lead to new sales
27
DISRUPTIVE TECHNOLOGY
28
Augmented reality & artificial intelligence
Some retailers have increased net revenue 5%
by using AI to improve online fit accuracy and
reduce returns.1
Simulating the in-store, physical shopping experience for customers.
Consumers have imperfect information when shopping online. Retailers want their customers to keep the items they purchase.
1. True Fit. 2018.
Outcomes
Customers can evaluate items with increased accuracy
Retailers can offer a differentiated e-commerce shopping experience
The likelihood of returns can be reduced
29
Blockchain
Returns fraud costs retailers roughly $15B to $22B globally each year.1
A decentralized ledger that uses peer-to-peer consensus to verify and authenticate all information recorded within the ledger.
Retailers want visibility into their returns process to limit fraud and mistakes.
1. Reverse Logistics Magazine. Edition 94.
Outcomes
Traceability, data visibility and reconciliation are improved
Credit processing is faster and fraud is reduced
Products are authenticated and a virtual warranty is established
30
Exceeding customer expectations is critical to our collective successWe put our strengths to work for you.
Enduring partnerships and expertise
Convenience of our nationwide access
Established and evolving delivery infrastructure
Secure technology infrastructure
Emphasis on sustainability
Innovative and customized solutions
31
THANK YOU
Top Related