As e-commerce has grown, so too has the problem of returns for brands. A National Retail Federation and Appriss Retail survey of 62 retailers published on Jan. 11 found that $101 billion worth of goods was returned during the 2020 holiday period, and for the year, over $428 billion in merchandise was returned in 2020, representing 10.6% of total U.S. retail sales.
FedEx’s (NYSE: FDX) Ryan Kelly, vice president of global e-commerce marketing, told FreightWaves in January that 52% of people surveyed have abandoned a shopping cart due to a seller’s return policies.
“Customers want a hassle-free experience that includes free shipping — or to be able to return a purchase to a storefront — and easy access to a shipping label,” he said.
A large part of the problem is the lack of access to information, locations and technologies that make returns easy for the consumer, Kelly said.
“We work with merchants to encourage them to do everything they can to understand why consumers are returning items, then try to prevent them through better communication and education. For example, if customers are returning a sweater because it’s too big, be sure to mention that the sweater ‘runs large’ in the description on the website,” Kelly said.
Historically, about 30% of e-commerce orders are returned in one form or another, a ratio that spikes during the holidays, reverse logistics firm Optoro said. By contrast, about 8% to 10% of orders placed year-round in stores are returned, the company said.
Brands looking for solutions are turning to technology, although technology alone can’t solve the problem. The lack of warehouse space is also a constraint for many brands. According to real estate services company CBRE (NYSE: CBRE), about 400 million square feet of space will be needed over the next five years just to manage the expected increase in online returns.
Narvar, a customer engagement post-purchase platform, is teaming up with Cycleon, a returns management provider, on a strategic tie-up that will provide a full-service returns solution. In a joint release, the companies said the partnership “makes it easy for brands to seamlessly centralize their entire reverse logistics engine from elegant customer experience to reduced shipping rates and item consolidation to value recovery.”
Cycleon brings 30 global distribution centers to the partnership, offering centralized locations where returns can be processed. Narvar offers a technology-driven solution that includes an intelligent rules engine.
“Returns are an integral part of the retail journey and will only increase as e-commerce accelerates. Retailers have been valiantly grappling with the challenges of balancing consumer expectations with operational efficiency,” Amit Sharma, founder and CEO of Narvar, said. “We’re thrilled to partner with Cycleon to support those efforts with a flexible and sustainable one-stop returns solution.”
Narvar has also partnered with brands such as Simon to provide drop-off locations for customers returning products. The deal with Simon allows a customer to return items purchased at over two dozen brands to any Simon location.
“Despite our deep roots in e-commerce, we’ve always believed in the persistent power of physical retail,” Sharma said when making the November 2020 announcement. “As we extend seamless consumer experiences across all channels for our retailers, we’re excited to join Simon to increase choice and convenience for consumers while supporting operational efficiency for retailers.”
Narvar also announced a deal with UPS (NYSE: UPS) and Cole Haan in November that allows Cole Haan items to be returned to any UPS Store with or without a box, and Narvar and UPS will facilitate the return.
“Aside from the physical convenience of returning packages to a The UPS Store location, our partnership with Narvar will further simplify the returns process. Consumers don’t need to worry about printing return shipping labels. And they don’t need to keep the original shipping materials that accompanied the item,” wrote Steve Chambers of The UPS Store.
The new agreement with Cycleon is another step in streamlining the consumer returns experience, which 73% of shoppers said impacts their decision to buy again from an online retailer, a UPS Pulse of the Online Shopper study found.
“Narvar and Cycleon are a great match, with complementary capabilities, many mutual customers and a shared vision to help retailers solve reverse logistics,” Jelle Schoenmaker, EVP of aftermarket services and general manager at Cycleon, said. “We’re excited to integrate Narvar’s market-leading front-end experience and data and intelligence with our operational expertise to deliver a comprehensive service.”