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ParcelLab CEO: Returns are not the end of the customer journey

Tobias Buxhoidt said brands should be using the returns process as a way to build a loyal customer base

FedEx sets earlier cut-offs for holiday shipments (Photo: Jim Allen/FreightWaves)

Tobias Buxhoidt is like any consumer. He purchased a pair of Nike shoes online only to decide to return the pair. Off to the UPS Store he headed to send the pair back to the retailer he purchased them through. Once there, though, the process bogged down.

At the UPS Store, Buxhoidt needed to log into a terminal, which required payment of a small fee, log into his email account, print a label and return to the UPS Store desk to complete the process.

“It took me about an hour,” he said, noting that the retailer did not provide a QR code that might have made the process easier.

Buxhoidt’s experience is not unique, but as the CEO of post-sales experience company parcelLab, it is something he sees every day at work.

“A lot of the customer frustration is coming from very basic stuff. It’s hard to return things,” he said.

Returns of online purchases could approach record levels this holiday season, according to post-purchase firm Narvar, based on estimated sales of between $27 billion and $30 billion.

Narvar’s State of Returns report found that 60% of items less than $20 are never returned, mostly because the e-commerce seller simply tells the consumer to keep the item.

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“Popular retailers have a habit of letting loyal customers keep products instead of returning them, especially if the price of the original purchase is less than what it would cost to process the return. With the global supply chain shortage, one can predict that low-priced items might be harder to come by online due to a lack of inventory and customers being allowed to keep items even if they would’ve returned them,” Narvar noted.

Loop Returns estimated that a single return can cost the retailer $102, including the associated customer acquisition cost to get that sale in the first place. For the majority of customers seeking a refund, that is the end of the relationship with the brand, the company said.

“At Loop, we see a refund as the end of the customer relationship. The customer didn’t want an exchange or store credit, which means they’re likely taking that money to shop somewhere else. By requesting that refund, they’re signaling that something about the product or experience was off and they don’t want to continue the relationship with your brand,” it said in a blog posting on returns and refunds.

Buxhoidt said the return process doesn’t need to be complicated and can provide an opportunity to further extend the customer-brand relationship if done correctly.

“We believe the customer experience shouldn’t be a straight line,” Buxhoidt told Modern Shipper. “It’s a chance to build a never-ending engagement. Even a return should be a start of a journey to bring that customer back.

“It’s such a great opportunity to sell more, but most importantly to maybe recover the revenue,” he added. “If that product is being returned, that revenue is being lost … so every chance you have to [recoup that money by getting a new sale or exchange is positive].”

ParcelLab research has found that 45% of customers are fed up with overcomplicated return shipping processes so much so that they would rather make a trip to a store than deal with an online process. Buxhoidt said that lack of communication is a common problem for brands.

“When it comes to the product being returned, I, as a consumer, am super anxious about when I am going to get my money back,” he said. “Delays can happen, and they can happen at the warehouse [or anywhere else in the supply chain]. … If I don’t hear anything about that, I will get really, really frustrated because I can’t get my money.”

ParcelLab’s data shows that 32% of customers want regular updates on the status of a return and another 45% want to know when the return reaches the warehouse. Buxhoidt said brands need to consider the returns process as part of the customer journey.

“[Data shows] that if I don’t satisfy their needs, the likelihood is very high that I won’t see them again,” he said. “It’s an element of the journey where you should be adding value, not frustration. It’s usually considered a cost thing — it is just a necessary evil to get goods [where they need to go] — but if you build it in a very customer-centric way you are adding value to your business.”

The 2021-22 holiday return season promises to be as complicated as any previous season, if not more so.

“We’re all aware of the supply chain issues that currently exist and will be there for a while,” Buxhoidt said. “The same applies to the returns as well. It’s the same network. It’s the same partners that will be involved.”

Retailers, he added, utilize returns as part of their inventory mix. According to Narvar, 60% of online consumers buy using the “bracketing” approach — the practice of buying multiple sizes of a single item and returning the ones that don’t fit — which means items are not in inventory when they are needed. A disjointed and inefficient return shipping logistics network not only frustrates the consumer, it prevents the retailer from quickly reselling that item.

Buxhoidt said the entire customer journey, from first sale to return, is a time for the retailer to engage with the customer in a productive manner.

“Think about the time you have during that process to engage with the customer. It might be five to seven minutes when first buying, but then you have 30 days or more during the returns period where you can engage with the customer,” he said. “I can differentiate myself if I can create great experiences.”

Buxhoidt said it is likely too late in the game for brands to repair their returns process this year, but even simple steps can be taken immediately to help improve the customer experience. This includes improving communication and making a plan for when shipping delays occur.

Longer term, he advised connecting the entire logistics process, even if outbound and inbound shipments are handled by different logistics companies.

“The most important thing from the customer point of view is that it is unified,” Buxhoidt said. “It’s our job to make [shippers] realize it and we have so many cases around this that show the positive business cases. But the awareness around this is still not there. Brands still discuss whether returns are good or bad. It’s the wrong discussion, there is no point, they are there. The question is how do you deal with it?”

 Click for more articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected]