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Loss Prevention

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On January 3, dubbed National Returns Day by UPS, the company shipped more than 530,000 packages. More than two million packages moved through UPS’s return systems that week, exceeding initial projections, and retailers were responsible for some 66 percent, according to Jim Brill, UPS marketing manager for returns services.

“We saw a single-digit increase in the total volume of returns that week, which is significant when you’re talking about a base of two million to start,” he says. In a low period — say, mid-year, when shipping takes a more regular cadence — UPS sees about two-thirds as many returns in a week.

The returns process is under greater scrutiny during the holiday season, but Brill contends that reverse logistics are paramount year-round. According to comScore’s UPS-commissioned 2012 Online Customer Experience Study, 63 percent of online shoppers look at return policies before making purchases; 48 percent would shop more often with retailers if they offered a lenient, easy-to-understand return policy.

“Policies and processes can really make or break the shopper’s perception of a retailer,” says Brill. “There’s no question that they’re looking to see if the [returns] process is easy enough to handle and if it is going to be a costly endeavor.”

Driving efficiency
Brill is seeing more companies employing returns managers and analysts in an effort to improve the customer experience and drive efficiency. “By paying attention to returns, [companies] can get inventory back into the warehouse more quickly — and back out the door to another customer who wants it,” he says.

Over the last two years, Brill has seen more retailers offer free shipping, and says those who are not — at least on luxury items or orders that reach a certain spending level — are behind the curve.

On the heels of free shipping comes free returns — a service currently available from only a small percentage of retailers. “The idea ... is bubbling up,” he says. “The challenge is that ... retailers will have to bake the returns cost in the price of the product. Based on the amount of discussion we’re having ... it will happen sooner rather than later.”

To reduce returns, Brill recommends better photography, improved assembly explanations — even videos to augment product information or explain the returns process. “You would think those things are logical in the course of doing business, but for many it’s a missed opportunity,” he says.

Expedited delivery, information
Another buzz-worth idea: same-day delivery, which gained some traction last year. A handful of retailers, including Walmart, tested the waters in a few markets during the holiday season. Still, most have yet to determine how many consumers want this expedited service and how they’ll handle the cost, especially under the stress of strained profit margins.

There is “a customer base for whom this is desired, but ... we believe that what matters more to shoppers is information,” Brill says, “including reliable estimates of when a package will arrive and the flexibility to determine what returns process works best.”

The UPS My Choice platform sends an e-mail, text or voice message the day before a package is delivered; members can reschedule or reroute delivery for a small fee. More than two million people have registered for the service since it debuted in October 2011, and there are now discussions about adding some of the same features to the returns process.