Online Returns are Growing Faster than E-Commerce Sales

Return Policy

We have been writing about return merchandise more and more throughout this year as the business of reverse logistics heats up to a record pace.

When 20% of your revenue is in a revolving door, forecasting can get pretty dicey. Add to that the overwhelming percentage of customers who expect easy, inexpensive return options, and it’s clear no business can overlook the power of reverse logistics.

Incidentally, if you like statistics, this article is going to be a fun read. The numbers on the subject are compelling, to say the least.

Breaking Returns Records

In the U.S. alone, Statista estimates return deliveries will cost $550 billion by 2020, an increase of more than 75% in four years. If that seems pretty bleak for the bottom line, let me point out that this figure does not include inventory loss or restocking fees.

The rate of returns is always higher during the winter holiday season. In 2019, UPS predicted an impressive number of returns even before Christmas Day even arrives… to the tune of 1.6 million per day. Merchandise is literally flying back and forth, changing hands constantly. For statistics fiends, this means there are more than 18 returns per second before the holidays are over.

January 2 is typically the biggest day for returns, forecast at nearly 2 million in 2019 (an increase of 26% in a single year). But online sales are only projected to increase by around 12% in 2019, which means returns are growing at twice the rate of online sales.

New Models

The current digi-centric commerce model relies on returns. According to Shopify, a full 90% of customers “highly value” free returns as a key factor in their buying decision. And nearly 70% avoid buying from companies that do not offer completely free returns.

Online sales returns are now averaging 20%, with 30% for holiday orders and even as high as 50% for “expensive items.” This is more than twice the rate of brick-and-mortar retails. Ironically, the physical storefronts often limit returns to re-saleable merchandise and simply put it back on the shelves.

Online Returns Are Another Species Entirely

Amazon encouraged a “no questions asked” returns policy, but has recently begun to address the overuse of the policy. Many of the returns cannot be resold and end up on liquidation sites. Small sellers on the giant platform may end up losing significant revenue if they cannot minimize returns, since they don’t always have the option to refuse and remain in good standing with Amazon. And with Fulfillment by Amazon sales, the decision is out of the seller’s hands entirely.

So what’s the bright side?

Benefits of Reverse Logistics

When handled correctly, reverse logistics can actually improve your bottom line as we described in our guest post at Storeya.

Planning for returns is actually quite similar to planning inventory requirements. If you address it ahead of time and have a strategy in place, there is nothing to fear. Although it’s hard to adjust the mind set, your business will benefit from letting go and embracing the inevitability of growing returns volume.

Get out ahead of the returns spiral by offering alternative programs. For instance, the Amazon wardrobe program allows customers to buy clothing with the intention of trying it on and only keeping what they like. It’s a perfect example of embracing the problem. This way, the business is prepared and can also charge accordingly.

Zappos is another company who made it a policy early on to accept returns, for free, all the time. And although they struggled operationally, the customer satisfaction rate was very high. They found that customers who returned the most also spent the most overall.

Reverse Logistics Strategies

Of course, the strategy will vary greatly depending on your business category. Apparel is the number one returned product category, with over 50% of these due to sizing issues. In this case, providing detailed sizing information up front can help cut down on the number of returns. And including accurate images from all angles, preferably with 3D viewing and human models helps too. Beyond that, designing a loyalty program around returns, similar to the examples above, mitigates the inventory loss and manages customer expectations.

For products that are easy to restock, such as DVDs and books, focus on the packaging and restocking needs and streamline the process so it makes a lesser impact. These items don’t expire and they rarely show wear, making it easier.

However, vitamin companies need to have a clear policy to avoid restocking expired (or close-to-expiring) products, which will only make a bad impression on the next customer to receive the item. This factor can impact the supply chain even earlier in the process, to manage inventory with longer shelf lives to allow for returns without gumming up the works.

Proactive Management

In some categories, it may make sense to build the cost of returns into product pricing. Since an average of 20% of merchandise will be returned, consider factoring this into the margins from the beginning. There are many elements to evaluate for improving reverse logistics flow.

Embracing the New Normal

The bottom line is returns are the new normal. How your business handles them can make all the difference between loss and gain.

When you are ready to explore options for fulfillment services, Medallion Fulfillment & Logistics and Sprocket Express are ready to step in and handle shipping and return processing.

The Amazon Effect: Considerations for eCommerce and Brick and Mortar Store Owners

In the increasingly crowded and competitive world of eCommerce, Amazon remains the gold standard. The impact of the online retailing behemoth has been so primal and far-reaching that marketing experts have coined a term for it: “Amazon Effect.”

As the leader in California fulfillment services, we work to stay on top of trends and innovations influencing the industry. Here’s what you need to know about the Amazon Effect and how it applies to your business.

Shifting Buyer Expectations

Amazon’s principal effect has come in the area of buyer expectations. Consumers are demanding a buyer’s journey be “frictionless and immediate,” and these expectations cut across the digital arena to goods and services purchased in brick-and-mortar locations.

These three benefits top the list of what retailers are expected to provide today:

• Free shipping, which is most prominently featured in Amazon’s Prime membership program. While shipping costs can be steep, Amazon has found that it’s paid off in powerful customer loyalty and add-on sales.

• Speedy turnaround time, where customers receive orders in days rather than weeks. Amazon Prime’s free shipping takes only two days, and same-day delivery is available in more than 10,000 locations.

• Easy access, with a variety of options for ordering and delivery. For example, Amazon offers delivery or pick-up for grocery orders and certain items are eligible for subscriptions where orders are entered and delivered automatically.

Generational Differences and the Millennial Mindset

Not surprisingly, younger consumers who have spent their entire lives with technology are more demanding when it comes to eCommerce fulfillment and delivery. A 2018 survey of online shoppers in the U.S., Canada and U.K. found that less than 50 percent of respondents between the ages of 18 and 34 were fully satisfied with their orders.

Other studies have uncovered the “Millennial Mindset,” which Amazon has embraced with great success. The Millennial Mindset is a group of six brand values that buyers from 18-34 rate highly in their shopping experience:

• Social Circle: Is a brand popular within a buyer’s circle of family and friends?

• Self: Does a brand generate an emotional connection?

• Innovative: Does a brand lead its field in creative advancements?

• Trusted: Does a brand have consumers’ best interests at heart?

• Purposeful: Does a brand contribute to the greater good?

• Accessible: Is a brand easily assimilated into a buyer’s lifestyle?

While this mindset originated with Millennials, it’s having a ripple effect through other generations. At this point, Generation X has adopted the mindset nearly as completely as Millennials have.

Countering the Amazon Effect in Brick-and-Mortar Stores

• Use locations to complement eCommerce, not duplicate or compete with it.

• Engage high-tech solutions to track in-store behavior

• Leverage mobile apps with mPos, location-aware coupons and personalized service.

California Fulfillment Services that Exceed Customer Expectations

Medallion Fulfillment & Logistics provides a comprehensive set of eCommerce services that scale to meet your specific needs. Contact us to learn more about why we should be your first choice in cost-effective and efficient California fulfillment services.

Medallion & Sprocket Express Can Help with East and West Coast Warehouse Locations

Coast to Coast Fulfillment Service Coverage

As an entrepreneur, it’s easy to fall into the trap of trying to do everything yourself. You soon find yourself spending more time working in your business rather than growing your business!

Growing your business means focusing your efforts on your strategic goals and delegating the rest of the work to the experts.

Doing your own fulfillment is a perfect example:

• It demands your attention every day even if you have more important things to do.

• It can get complex if you’re trying to expand your reach into multiple channels and other countries.

• It gets in the way of scaling your business.

Outsourcing your fulfillment:

• Let’s you pay for only the services you use.

• Saves money on staff, warehousing & order processing & shipping.

• Can speed delivery when shipping from multiple locations.>

• Let’s you focus on growth.

We’d be happy to have  a no cost, no obligation discussion to help you decide if you’re ready. If you already are using a fulfillment center let us see if we can improve your level of service and/or save you money. Give us a call at (818) 998-8366 today!

Emerging Trends Expected to Impact eCommerce Stores

Mobile Matters

Online shopping has gone beyond a trend to become an established and lucrative retail channel. Demand has become so great in fact that new trends are emerging that will feed consumer thirst to shop conveniently online.

The eCommerce industry continues to change and evolve as sellers learn more about consumer habits and preferences. Here’s a sneak peek at the trends expected to shape the direction of eCommerce in 2019.

Personalized Experience

While online shopping might seem impersonal, electronic data gathering methods are sophisticated enough to let sellers tailor the eCommerce experience to meet each consumer’s preferences. Targeted content replicates brick-and-mortar shopping more closely while retaining digital convenience.

Multi-Channel Retailing

The online buyer’s journey can take them through both traditional and non-traditional outlets including brick-and-mortar, social media and eCommerce marketplaces. Multi-channel retailing involves selling your product where, as ShopifyPlus puts it, a customer is “never more than a click or clerk away from buying.”

Integrating multi-channel retailing can be costly. It requires a highly focused strategy and an infrastructure scaled to seamlessly accommodate various outlets. But with studies showing 73 percent of shoppers use multiple channels, the expense is worth it.

Customer Service Automation

Would you be surprised to hear it’s predicted that 85 percent of all customer service interactions will be handled without human agents by 2020? Customer service automation is now a matter of when, not if. A majority of people are likely to abandon a seller after only one bad customer service experience, so streamlined automation can be invaluable for customer retention.

Mobile Platforms

Whether by phone or tablet, most Americans are only a few clicks away from eCommerce outlets at all times. Consumers use mobile devices throughout the sales journey, from research to final transaction.

Mobile commerce is expected to reach 69 percent share of total purchases and 45 percent of total eCommerce revenue by 2020. Even retailing giant Walmart realized a 98 percent increase in mobile sales by optimizing their site’s function and design.

Same-Day Delivery

Savvy consumers, used to the immediate gratification of brick-and-mortar shopping, aren’t willing to sacrifice that feature for the ease of online purchasing. Nearly three-quarters of consumers say they would shop and spend more if same-day delivery was available.

Unsurprisingly, roughly the same percentage of warehouses name same-day delivery as their biggest challenge. Meeting the demand has led to a search for creative solutions, including unconventional delivery methods such as drones.

Fulfillment Warehouse Services that Grow Along with Your Business

Our fulfillment warehouse services based in Los Angeles, California are scalable to accommodate your business through new trends and innovations. Contact us to learn why Medallion Fulfillment & Logistics is the #1 choice for successful eCommerce retailers.

Don’t Let Your Business Suffer Due to Amazon’s Policies, You Have Options!

Don't Let Your Business Suffer Due to Amazon's Policies, You Have Options!

We’re all about solutions here at Medallion Fulfillment & Logistics. The coronavirus pandemic demands that we think outside the box to keep businesses growing and homebound customers satisfied.

Amazon froze shipments from March 17th to April 5th, and stated the following on their website:

“While we will continue prioritizing the products we can receive beyond April 5, we are now able to broaden the list. Given our constrained capacity, we are doing this on an item-by-item basis. We have updated the Restock Inventory page and Restock report in Seller Central so you can check which products are eligible for shipment creation. We consider many factors when determining eligibility, including high-demand products customers need now; current inventory levels and inventory in transit; fulfillment center capacity; and our ability to adhere to the latest health guidelines.” Read the full article at Amazon Seller Central.

What we are continuing to hearing from Amazon sellers even as recently as this week, is that Amazon is still restricting or refusing incoming stock replenishment shipments.

To solve problems many sellers are having with Amazon, we have developed a special program called FBM (Fulfillment by Medallion). The FBM program allows you to ship product to both or either of our East Coast or West Coast warehouses, and gets you back shipping goods to customers the day after we receive your products.

This redundancy with FBA lets you be proactive to the current business and virus situation. And, our FBM allows you to leverage sales to homebound workers; who may be shopping to pass the time, or who are buying items for family members to stay entertained with while home from school. With no shipping or stock restrictions, our program can get you back in business fast!

You can easily select to move to Fulfillment by Seller within the Amazon Seller Central and not be held hostage or be affected by Amazon’s changing policies and shipping problems.

With a growing dissatisfied Amazon warehouse staff that has expressed fears of contagion requiring management to provide temperature checks and masks in warehouses, FBA now seems a less stable option for businesses in the coronavirus pandemic.

Here’s how our FBM (Fulfillment by Medallion) program works:

1. Ship your goods, or a selection of goods, to our East Coast or West Coast warehouses or to both.

2. Our special dedicated FBM On-Boarding Team fast tracks processing and works with you to implement your ordering and shipping fast. We can start shipping orders the day after we receive your products in our warehouse.

3. There are no long term contracts and you can even get a formal and affordable price quote today.

4. Get back in business – shipping to homebound and internet-connected potential customers in one day after receipt of your products in our facility. Don’t miss a beat and make your sales projections this quarter, even with communities and workers on lockdown.

If you are shipping from Amazon Fulfillment and having trouble getting your orders fulfilled due to the coronavirus disruption, please consider Medallion Fulfillment & Logistics for your shipping needs.

• We Provide Fulfillment By Merchant for Amazon & Replenishing FBA

• We Support Shopify, WooCommerce, Amazon, Ebay and all other e-commerce platforms

• We Offer Same Day Shipping

• We Have Competitive Pricing

• 37 Years of Family Owned & Operated Services

Fulfillment Centers in Los Angeles and Boston for East/West Coast shipping.

We are here to help. Give us a call today and let us show you how we can get you back in business fast.