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Considering returns strategies in omnichannel retail

Homeowner prepares to return a package to the retailer

Consumers expect a consistent and accurate experience in the omnichannel shopping world, says Angelia Herrin, editor for special projects and research at Harvard Business Review (HBR). "Omnichannel" refers to shopping that takes place across a multitude of platforms: online, mobile and in-store.

Buyers expect complete and accurate information, whether they are buying or returning at any channel, she says. If these expectations are met, it is likely that shoppers will remain loyal. If these customer expectations are not met, they typically find other places to shop, Herrin says.

UPS recently sponsored an hour-long webinar featuring HBR's Herrin and Dale Rogers, a professor at Arizona State University in Tempe, Ariz., who is a leader in supply chain finance and reverse logistics. The HBR webinar discusses the benefits of a seamless customer experience - from shopping and purchasing to returning goods for refunds or exchanges. Watch it now.

Returns build long-term relationships

In a recent UPS study called "Rethinking Online Returns," 66 percent of customers indicated they will check the return policy before buying the product. During the webinar, Herrin asks Rogers, "How do you make sure you're meeting those expectations? Is there a way to look at returns in a more proactive way?"

Rogers says returns were once considered a bad thing by retailers. However, he says the returns process can be a strategy of improving long-term customer relationships. Customers have high expectations about the places they shop and are much tougher to please today. In the modern shopping world, there is more information available to customers than ever before, creating educated shoppers that deserve respect from retailers and their websites.

Rogers says firms tend to focus on the forward supply chain and neglect reverse logistics - returns - in an omnichannel business. Historically, Rogers says, extremely successful firms were often built on strong reverse logistics policies. For example, in the 19th century, J.C. Penney was built on two strategic policies: A cash-and-carry policy and a no-questions-asked returns policy. That was a large differentiator from most retailers at the time. This returns policy moved the risk from the consumer to J.C. Penney, resulting in a few faulty transactions with returns that should not have taken place. Nevertheless, the move was an overall gain by establishing customers' loyalty for life.

Today, Herrin says that many retailers seem to be missing the mark on returns, and according to the UPS survey, only 32 percent of retailers offer omnichannel returns.

Reverse logistics gap

Rogers says consumers are ahead of retailers. For most big firms, restructuring their company around new technology is difficult. Enterprise resource planning (ERP) software allows firms to automate aspects of their businesses. However, Rogers says, this technology tends to cement business processes and makes it difficult to change with customer expectations.

Rogers says when customers are considering a relationship with a company, they want low risk. The customer is never completely certain that the product is going to function or fit well, and that is part of the buying experience.

Herrin says when the firm does not specify a warranty period, a return period or other details, consumers may begin to mistrust the retailer.

Closed-loop shipping and logistics

"You should structure your return system so that the decision about [what happens] when an item is going to come back is already made," Rogers says. It needs to be closed-loop: Returns must be built into the system. What happens when your merchandise comes back can be determined before it's even shipped out to your customers.

Rogers says consumers do not want friction. With modern technology, they will simply find another place to buy a product if they do not feel comfortable buying from a particular retailer. Firms can expect to compete not only on a local level, but also on national and international levels. If a seamless, integrated experience is met, though, customer loyalty can be established for life. If not, buyers have countless other places to shop.

Learn more about UPS reverse logistics.

Find Out More

  • Which returns option is right for you

    Returns are often overlooked as opportunities to reduce costs, generate revenue and build positive brand experiences. With UPS, you have access to the broadest returns portfolio in the industry.

    Compare UPS Returns options
  • Reverse logistics and post-sales service

    UPS post-sales services – distribution, warehousing fulfillment and repairs – can help you take advantage of opportunities faster with less capital investment. 

    Learn more about reverse logistics
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