Three main drivers of skyrocketing returns costs this holiday
The holiday season already makes up 20% of all returns each year – and that was before we introduced a global pandemic into the mix.
eCommerce sales are soaring due to COVID-19, and we know return rates for online shopping are 3-4X those of in-store purchases. In short, this means 2020 will bring more holiday returns than ever before.
Meanwhile, USPS, UPS, and FedEx have all reported planned holiday surcharges. Retailers are facing the perfect storm -- a massive problem (returns) that is growing rapidly (more eCommerce adoption) and getting more expensive at the same time (rate increases). It is now more important than ever for retailers to control return costs…. But how?
This blog highlights the three areas where retailers spend the most on returns, and then suggests actionable steps to reduce those costs.
Three drivers of high return costs
Retail leaders save an average of 21% on returns by addressing the three most common drivers of expensive reverse logistics costs:
1. Individual shipments
For retailers without stores, or those still struggling with store closures due to the pandemic, the only option for returns is the mail. Traditionally, this means shipping individual orders from the customer back to the warehouse – a practice that is not only expensive, but wastes truck fuel and cardboard as well.
Instead, aggregating items in cardboard-free containers and shipping them in bulk allows retailers to cut costs while being more eco-friendly. When shoppers drop items off at Happy Returns’ Return Bars, for example, their items are commingled in our reusable totes alongside those from other brands. The totes are shipped to a regional Return Hub when they are filled (or a minimum number of days passes), driving down the shipping cost per item. At a Hub, they are sorted by brand, processed, and reaggregated for bulk shipment back to the retailer in reusable totes. This makes them great for the environment, and great for your bottom line, as in-person returns typically save 20% or more versus the cost of returns by mail.
2. Escalating carrier costs
Shipping costs have increased each year, rising far faster than consumer prices. Meanwhile, COVID-19 has increased the demand for shipping far faster than carriers can build capacity. As a result, carriers have introduced price increases in the form of new holiday surcharges that put even more returns-cost pressure on retailers.
Now more than ever before, retailers need to depend on experts to avoid expensive shipping. One tactic is to leverage group buying power to access lower carrier rates. Happy Returns is proud to pass our reduced rates to our customers, helping them to drastically cut the cost of by-mail returns.
3. Costly and inefficient returns processing
Retailers with limited warehouse resources often have to decide between fulfilling orders and processing returns. Delayed returns processing leads to unhappy customers and drives expensive customer service calls inquiring about the status of refunds.
Forward-thinking retailers don’t need to choose between filling orders or processing returns. By outsourcing this work to Happy Returns, expert teams sort, inspect, and process items for resale at our Hubs before bulk-shipping them back to their designated locations. An efficient process saves time and money – two things that are likely at the top of your holiday wish list.
Want to learn even more ways to save? Join us for our webinar, “Conquer holiday returns during COVID-19” on September 24 at 12:30PM PST/3:30PM EST for deeper insight into the strategies mentioned above, plus seven ways industry-leading retailers plan to lower costs this season.
