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Incoming! How to Manage a Surge in Reverse Logistics Volumes

According to Digital Commerce 360 and Adobe Analytics, “Ecommerce sales crossed a record $5 billion on Thanksgivingsurged 21.6% on Black Friday, and increased 15.1% on Cyber Monday. And though we’re still waiting on the final numbers, should Adobe’s prediction for holiday sales prove accurate and online holiday season spending reach $189 billion, representing 33% growth year-over-year (YoY), 2020 will be permanently cemented into the holiday e-commerce sales record books.

But unfortunately for retailers, what goes out… might just come back. According to CBRE, e-commerce returns this season could total as much as $70.5 billion, a 73% increase from the previous five-year average, which means reverse logistics operations for many retailers will be tested like never before. In fact, the National Retail Federation predicts budgets for global reverse logistics technologies will also increase in 2021 — forecast last year to hit $604 billion by 2025 — as retailers look to streamline the consumer experience and minimize returns costs.

A Multi-Carrier Shipping System Enables Faster, Better Returns Management

Optimizing reverse logistics often comes down to having sophisticated logistics management practices in place, and a cloud-based multi-carrier shipping system will streamline returns shipping execution and reduce returns shipping costs. The most sophisticated solutions offer shippers the ability to determine the best returns policy and carrier services by automatically rate shopping across carriers in the retailer’s transportation network, selecting the most appropriate carrier services based on established business rules, printing necessary paperwork and labels, tracking inbound shipments, and auditing the entire shipping and returns process to identify cost-saving opportunities throughout the fulfillment lifecycle.

Tips to Reducing the Financial Impact of Returns

Dealing with e-commerce reverse logistics can be expensive. Statista projected return costs, including delivery and restocking, would reach $550 billion in 2020 alone, prompting retailers to aggressively work to reduce the cost and volume of returns long before peak season hit.

For some companies, the strategy is to avoid returns altogether. Many luxury brands have opted to go this route, choosing to skip the shipping, handling, and re-stocking expenses and improve customer service in one motion. E-tailers (sellers with no brick-and-mortar stores) are now increasingly following suit, sometimes telling customers to keep incorrect products and avoid the cost of returns, and in a new development, big box retailers such as Walmart and Target are also telling their customers to keep what they don’t want.

Other retailers, however, choose a different path and instead opt to handle returns and re-stock and re-sell their inventory. For these retailers, here are a few tips for streamlining returns processes and mitigating returns costs:

1. Move away from a single carrier strategy

If we have learned anything as a result of the COVID-19 pandemic, it’s that businesses need multiple carriers contracted and ready to go, and a multi-carrier shipping system to rate and rate shop carrier services across the transportation network. A multi-carrier shipping system will enable you to select the optimal carrier service for each return shipment according to your carrier contracts and business rules, balancing capacity, optimizing spend, and preventing inbound shipping delays so you can re-stock and re-sell inventory quickly.

2. Leverage data analytics and Business Intelligence

The right multi-carrier shipping system will also include Business Intelligence. These cost analysis tools will enable you to run contract analysis analytics that highlight carrier performance and cost metrics and compare carrier performance against contract terms. With these analytics in hand, you’ll be better informed during carrier renegotiations and empowered to select the best vendor long term. And if your volume is great enough, you might have the leverage to negotiate “any point to any point” rates for your returns with the big carriers (FedEx, USPS, UPS, DHL).

In addition, Business Intelligence will allow you to answer the question: Are you shipping to the optimal returns center? Sophisticated analytics will allow you to quantify the value of making adjustments to your returns strategy. For example, looking closely at the zip codes served by various returns centers, can you make adjustments for cost? Volume? Better carrier services? Is your network geographically optimal? Maybe you should move returns centers, or analyze outsourcing options for returns processing.

3. Prioritize the customer experience

The right multi-carrier shipping system will be flexible enough to allow you to choose the returns workflow and customer experience that works best for your business. The technology provides you with the ability to control for return shipment costs in any scenario, whether the customer is initiating the return online or working with an in-house customer service rep. Added bonus: the technology also guarantees your customer is using the right shipping label, regardless of whether the customer is dropping the return off at a UPS store or FedEx office or mailing it through the USPS.

In addition, a multi-carrier shipping system with Business Intelligence will allow you to assess your customer behaviors so that you can decide the best-fit approach to returns. For example, based on returns patterns, you may want to establish a relationship with FedEx (FedEx Office) or UPS (UPS Store) so customers can package and drop off returns easily.

4. Reduce the number of avoidable returns

Zero returns cost will always be cheaper than any returns cost. Analytics and Business Intelligence can play a pivotal role in uncovering a variety of cost-saving opportunities beyond criteria for returns carrier service selection. Analytics can identify weak links in fulfillment by tracing wrong product shipments to certain distribution centers, pickers, or procedural problems so staff can correct inventory and warehouse management processes or take other steps to resolve the issues.

When fulfillment errors do not explain patterns of recurring returns, analytics can point to potential merchandising problems and answer questions that include:

  • Which products are most returned and what can be done about it?
  • Are most of the returns originating from the same product or product category?
  • Should a retailer consider discontinuing product lines or only selling certain products in-store?

Identifying routinely-returned or problematic products gives the retailer a chance to take proactive steps to address the issues – whether it’s something as simple as an incorrect size listing in a product description or something more serious, such as a defect in the manufacturing, prompting regular returns.

5. Combat fraudulent returns

Analytics can also play a critical role in identifying the prevalence of fraudulent returns and determining their impact. Combatting fraud helps many organizations reduce the cost and volume of returns, as annual losses from fraudulent returns are estimated at $27 billion, according to Appriss Retail, who also estimates return fraud at 8.8% in 2019, a 76% increase year-over-year.

Luxury brands in particular need processes in place to ensure they never accept counterfeit products as legitimate returns; even infrequent instances of fraudulent luxury product returns can wreak havoc on organizations. Every effort should be made to determine how often this happens and deter future instances.

Select the Right Multi-Carrier Shipping System to Better Manage Reverse Logistics

Reverse logistics will always have a peak season after the holidays, and an inability to maximize efficiency in reverse processes will routinely lead to higher costs. Fortunately, using an advanced multi-carrier shipping system can make a world of difference, and many companies turn to Logistyx technology and expertise to customize and automate their returns processes.

Download our white paper: Managing the Rise (and Cost) of Returns to learn more about how a cloud multi-carrier shipping system can help you save money on your returns.

Boosting Sales with Ecommerce Fulfillment: Ken Fleming Shares Tips with Multichannel Merchant

Heightened customer expectations and growing demand for faster, more convenient delivery have changed the ecommerce fulfillment game for retailers. To better meet these needs, many retailers increasingly put the customer first – not the product – to build loyalty. Leveraging automation in ecommerce fulfillment processes can help retailers provide optimal service and streamline the customer experience without increasing costs.

In a recent article for Multichannel Merchant, Logistyx President Ken Fleming shares multiple creative angles for retailers to best optimize ecommerce fulfillment operations in the age of high consumer expectations and increased competition. While some view these modern changes to the supply chain as a challenge, Ken provides insights on how to turn them into an advantage. The key is establishing a proactive, data-driven strategy built around automated technology to optimize parcel shipping and better serve customers.

Ken’s advice offers retailers a fresh perspective on a variety of tactics they can implement or revise in their organizations to set themselves apart from the competition and stay modern. Read Ken’s full article on Multichannel Merchant: “How to Boost your Sales with Ecommerce Fulfillment.”

Polishing Delivery Processes with Logistyx TMS

“On Trend, On Time” is Gemline’s promise to more than 20,000 corporate customers who rely on the company for the latest in promotional items.

From fine writing instruments to coolers and the latest solar-powered phone chargers, Gemline sources more than 1,000 products for shipment across the US, Canada, EU, and Asia.

The Challenge

To ensure on-time delivery, Gemline turned to Gartner. Gartner analyzed operations and recommended the IFS Business Partner Logistyx Technologies.

Gemline wanted to:
  • Replace its insufficient shipping application and retire its carrier provided systems
  • Implement a more flexible method of onboarding new carrier services to maximize value for customers
  • Reduce labor-intensive shipping processes and streamline export compliance
  • Retain their “bill-as/ship-as” rating process and “blind ship from” requirement

The Solution

Logistyx TME for IFS with routing, packing, manifesting and management modules deployed at six pack stations in one DC.

The Power of Transportation Management in E-Commerce Parcel Shipping

Companies racing to leverage e-commerce opportunities may suddenly find themselves shipping internationally – and at high volumes.  To do so successfully means simultaneously:

This is no easy feat – although e-commerce creates seemingly infinite sales opportunities, it also introduces new pressures that many organizations aren’t equipped to handle.

Speed is the New Currency

Customers have been conditioned by popular e-tailers such as Amazon and Alibaba to expect same-day/next day delivery.  And it doesn’t seem likely these expectations will lessen any time soon.  On the contrary, they may actually increase.  In its 2018 Global Consumer Insights Survey, PwC asked approximately 22,000 shoppers worldwide to weigh in on their shipping preferences – from deliveries to returns. Survey results revealed for one-third of those Amazon customers who use the company’s Prime service, the most important benefit cited was unlimited free delivery (mentioned by 72% of Prime users), and one-quarter of Prime users say they prize Prime’s free two-hour delivery option as well.

Shipping Parcels Globally Creates a Complex Logistics Ecosystem

While geographic boundaries may have shrunk, crossing these boundaries requires shippers to navigate a labyrinth of local couriers, paperwork, tariffs, and customs – and if a shipment includes a high value or hazardous item, the process is even more elaborate.  Add consumer expectations for same-day/next day delivery to the mix, and organizations are suddenly under tremendous pressure to flawlessly navigate cross-border shipping while eliminating any chance of a shipment being held up at customs.

Customer Expectations

Customer expectations are high and evolving, created and re-created daily as they encounter highly satisfying experiences from product discovery to product delivery.  According to a new report from project44, 85% of marketers now say delivery is moderately to very important to their brand and customer experience. “Whether it is ordering dinner via Grubhub, curbside pick-up for household items at Walmart, or Amazon Fresh’s store-to-door grocery delivery, companies are increasingly expanding their offerings to include services that bring products directly to consumers.”  This means that for retail shippers, working on the customer experience post-checkout is essential for repeat purchases.

Omnichannel Complications

Omnichannel order fulfillment complicates parcel shipping workstreams, as companies move inventory from distribution center (DC) to store, from store to store, from store to consumer, from

DC to consumer, and more – all in parallel.  While omnichannel distribution can improve sales, customer service, merchandising initiatives, and more if implemented effectively, there are disadvantages.  For example, using retail stores as fulfillment centers can create major challenges for in-store productivity/profitability, customer service, and staff retention, and as retailers decentralize shipping operations and access inventory in stores, this creates “order fragmentation” and increases costs.

Video: Omnichannel Retail | 1:20

Siloed Operations

Transportation teams often operate in a silo, and decision making becomes flawed.  While larger organizations may be disciplined with data strategies and use of business intelligence, small organizations may be so focused on buzz words like ‘big data’ that they have overlooked the importance of ‘right data.’ Management may not fully realize the value of business intelligence, or they may feel overwhelmed when they understand they lack key informational insights or have data trapped in silos.

With all of these pressures, it’s no wonder organizations struggle to seamlessly execute end-to-end e-commerce shipping. And as long as shipping processes remain manual and disconnected from larger enterprise systems, shipping data will continue to be siloed and leadership will be left flying blind—with no way to plan, execute, and measure their parcel shipping operations at a strategic level.

While it may feel like a daunting task, getting up to speed – and continuing to maintain pace –  with the e-commerce market is no longer optional.  Fueled by mobile, which saw sales increase 55% in a year, eCommerce in North America grew by 16% in 2018 to over $500 billion.  The urgency and the opportunity to work differently has arrived.

What Not to Do

Many organizations are acutely aware of the pressures that come with e-commerce parcel shipping, but their attempts to address it continue to be tactical, rather than strategic. They roll out various productivity initiatives in the warehouse, they increase the number of carrier workstations on the warehouse floor, or they retrofit existing platforms – all the while thinking, “Well, this has worked for us before.” These initiatives inevitably fail because the tools and technology weren’t built for the demands of e-commerce order fulfillment and the reality of how people and companies must work in today’s shipping environment. In the world of modern shipping, surviving and thriving requires bold, new steps.

A Bold, New (Necessary) Way

A Transportation Management System (TMS) for parcel shipping enables organizations to transform e-commerce shipping processes – optimizing, connecting, and adapting the way transportation teams work so shipping volumes, and success, can quickly scale.  How? By helping teams save money, time, and labor in shipping.  It can also solve many issues within fulfillment ops, procurement, finance, and customer service.

Think of a TMS for parcel shipping as a crucial vertebrae in the supply chain backbone. It connects to all other systems and tools in a boundaryless way, allowing organizations to start small and grow across the enterprise when ready.  It helps supply chains move at a new pace by uniting end-to-end shipping tasks and data, which in turn allows fulfillment, procurement, and customer service teams to focus.  Suddenly, organizations can:

  • Leverage a single system to manage carrier contracts, comply with label and documentation requirements, and see the long-term impact of various carrier service rates – while also increasing capacity to identify new carrier services and on-board them quickly
  • Integrate parcel shipping with other supply chain solutions, such as ERP, WMS, and OMS to create one ecosystem, so to speak, for the entire shipment lifecycle
  • Centralize all parcel shipping data (i.e., shipment volumes, cost variables, delivery events) and run data analytics and reports to gain visibility and improve decision-making on everything from transportation budgets to carrier invoice payments
  • Achieve higher on-time delivery rates, enable proactive customer communications regarding delivery, and automate the returns process

A Mandate for the Modern Age

A TMS for parcel shipping both accelerates and orchestrates e-commerce shipping with greater precision and certainty, making it possible to see what’s happening across the entire shipping ecosystem in real-time. It’s modern transportation management at its finest, where all parcel shipping activities can be planned, aligned, choreographed, and measured. When you consider that according to Gartner, by 2020, same-day delivery will drive up logistics costs as a percentage of revenue by 50%, having a TMS for parcel shipping is no longer a “nice-to-have,” it’s a true necessity in the modern world of e-commerce.

Learn more about Logistyx TME.

Logistyx TMS for Parcel Doubles Shipping Throughput for Lightbulbs.com

Lightbulbs.com easily transitions from six shipping stations to two, despite doubling e-commerce shipping volumes.

Service Lighting and their online superstore, LightBulbs.com, have provided lighting solutions for more than 1 million businesses and homes since 1951. When Paul McLellan, President, launched the company’s online store in 1996, he knew that technology was going to drive the growth of their company. Now, their ecommerce site brings in 80% of their business.

Business Challenge

LightBulbs.com had six shipping workstations, all with standalone, carrier-provided shipping software. The shipping process was cumbersome.

Solution

LightBulbs.com was able to go from six shipping workstations to two stations, combining the Logistyx parcel shipping software, Rice Lake iDim 3D Dimensioning systems and two Size-IT mobile dimensioning calculators.They gained tremendous efficiency. When sales doubled in their peak season, they were able to handle all of the shipping volume on the two shipping workstations without adding staff.