Every product-driven company deals with product returns, especially at this time of year. However, eCommerce companies face a particular challenge. While physical retailers can handle returns in their stores, what do online businesses do about it? Increasingly, third-party logistics companies step in to fill this gap. A good thing too, because an online sale often hinges on how you handle returns.
Third-Party Logistics Filling an eCommerce Gap
Anecdotally, online channels experience a higher return rate than physical retail. For example, in 2016, eCommerce return rates were said to be three times that of that for brick-and-mortars. However, we’ve read that, depending on who’s buying what, any business can face up to a 45% return rate on some products. While a generous return policy can win a sale, managing shipment back to the warehouse can be tricky. Third-party logistics (3PL) providers have seized on that gap in the market.
Big 3PL Collaborations
Generally speaking, consumers would rather return a product in-store than via courier. Even if an eCommerce company offers free returns, consumers find arranging home pick up an intrusion and hassle. FedEx recognized this when it teamed up with Walgreens to locate drop-off/pickup points in the retailer’s 7,000+ US locations. The partnership put FedEx close to 80% of the US population. While it brings more foot-traffic into Walgreens, it is also seen to entice eCommerce retailers to use FedEx for reverse third-party logistics.
Back to the Warehouse
While shipping is a major part of handling eCommerce returns, what happens in the warehouse is equally important. There shouldn’t be any functional difference in the warehouse, whether you run it yourself or you use a 3PL. In either case, an eCommerce business must have the mechanism to take the product back into inventory and apply an exchange or credit for according to the returns policy.
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