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Returns - No Longer A Dirty Word

The Pain of Returns - A Consumer's Dilemma

Recently, I experienced firsthand the all-too-familiar frustration of online returns. Having bought a cute pair of jeans online, I was very excited. After waiting a week, the package finally arrived. I opened the shipping box and tossed it to my dog, a 3-legged boxer named Oreo, who loves nothing more in this world than shredding boxes all over my living room. He had a great time, unfortunately, I did not.

As happens all too often, the jeans were cute but did not fit me well. That mild disappointment turned into a huge annoyance once I had to begin the returns process. First, I had to deal with the sticker shock of a $7.99 processing fee to make the return. Then I had to go through an online portal to receive a label. I was then required to print the label and tape it to the box. Who even has a printer (with ink), or knows where the tape is in their house? Luckily there was a QR code option to print the label at UPS. But I still needed a box, which was in a million little pieces thanks to Oreo. I spent a few days casually navigating the corners of my house for something appropriate, only to end up using a shoe box. The next problem was finding time in my hectic schedule for a trip to UPS, easier said than done. I am embarrassed to admit the package sat in my car for 5 days. I finally got around to navigating traffic, operating hours, and lines to drop it off at UPS, and then the refund wait began. It took another two weeks before I received my refund, sans $7.99. It’s 2023, people, AI is a few years away from enslaving us all, and I’m out here packing boxes and doubling as a delivery driver for UPS.

I know I am not alone in the frustration I felt throughout the whole process. Millions of consumers voice their opinions in industry research papers, polls, and the platform formerly known as Twitter, yet it feels like the customer experience is an afterthought in the returns world. But what if this could change? What if the post-purchase experience wasn’t just an afterthought but a central, seamless part of the e-commerce journey?

Bar graph showing the biggest paint point for e-commerce shoppers when trying to return items purchased online.
Biggest Pain Point When Trying to Do Online Returns

Returns By The Numbers

The numbers speak for themselves; average e-commerce return rates hover around 20-30% depending on the industry. 82% of US consumers said they would be more likely to shop at a retailer if they offered free returns. The same percentage of consumers said they check the return policy before deciding to purchase from a brand.

Over 40% of consumers state they will swap retailers if the return experience is bad. Moreover, 50% of consumers state they’ve engaged in bracket buying - buying multiple variances of the same item (color/size) with the intent of returning most. It doesn’t take a genius to see that the consumer treats the return as part of the online shopping experience, on par with the purchase and unboxing experience itself. Brands remain out of touch, focusing on their own convenience and discouraging returns by making them more cumbersome. Industry reports come out year after year offering strategies to reduce returns, create barriers, or general “best practices” to limit returns all while framing the returns experience as a net negative for brands.

Bar graph showing the leading online order return preferences among shoppers in the United States.
Leading Return Preferences Among Online Shoppers in the United States In 2022

In an economic landscape full of uncertainty, where consumer retention is vital for brand survival, it seems like every “expert” and industry report is completely out of touch with consumer expectations and desires. The best advice that is offered is to convert returns to exchanges since the most common reason for returns is size, fit, or color. Yet even then, the cumbersome experience, and high costs to both consumer and brand, are still a central pain point.

The Three Stages of Returns: Challenges and Opportunities

The core of the Post Purchase Dilemma comes down to three stages that are each expensive and difficult for brands and their logistics providers.

Package Handoff - Handing the package to a Carrier

In the same way that last mile logistics are expensive and inefficient, the returns first mile is the same challenge in reverse. The return items need a package and a label to be accepted into the carrier network. Moving a singular package on a unique route not shared by any other package is pricey. For a carrier like UPS or FedEx, profitability lies in the full truck, train, and plane load that moves long distances, where economies of scale are king. Picking packages up directly from residential locations and taking them to a distribution center is a net loss when looking at the full journey. Not to mention the costs of the label and the packaging itself.

Recently players like DoorDash and Narvar have entered the First Mile Returns space by offering a pick-up service for a fee charged to the consumer. DoorDash charges $5 to take a package, labeled and ready to go, to UPS, USPS, or FedEx - saving the consumer the drive but not much else. Narvar’s Home Pickup offers a similar convenience to the consumer for $7. Both services are paid out by the consumer in addition to the usual $5-$10 the brand charges for the shipment and processing of the return. As convenient as saving a small bit of time in the overall process might be, it's still very expensive for those of us who do a lot of online shopping.

Return Disposition - What’s in the Box?

Once the pair of jeans I ordered made it back to the brand’s warehouse someone must open up the box and verify a few things:

  1. Did this customer actually send us back the pair of jeans or just some rocks?

  2. What condition are the jeans in?

  3. Can we put these jeans back into our inventory?

Although this seems straightforward and self-explanatory, this process is very time-consuming and costly to the brand. Any e-commerce brand wants to focus all of its limited resources on the things that make money, selling products. That’s why, anything that takes employee time away from the money-making aspect of the business is costly. Plus the longer it takes to disposition, the less likely it is that the product can be put back into inventory, especially when product seasonality comes into play.

The other aspect of the disposition is the time to refund. Many digital return providers like Loop and Rever, provide instant refunds, but it’s just an insurance policy against potential fraud, and the premium is paid by the brand. In reality, the most secure form of refund verification is done by the brand at the point of disposition. For example, Victoria’s Secret makes customers wait 2-3 weeks for a refund. Unfortunately for us online shoppers, this is a pretty common wait time for e-commerce returns.

Reshipment - Racking up the miles

In a world where Amazon burns money to maintain logistics supremacy, sets unreasonably high expectations with consumers that echo across the industry, and blackmails brands into maintaining products on their marketplace, how does an e-commerce company even maintain table stakes? It’s nearly impossible for a brand to handle their own fulfillment and shipping while maintaining a profit without a giant processing operation.

Let’s revisit the jeans I returned; the brand is located in Southern California so when I returned the jeans from here in Texas they went all the way back to California (that’s about 1,300 miles each way). Those jeans could be resold and shipped back out into the world. There is a wide range of places they could eventually end up in, including back here in Austin. If that is the case, then the total miles traveled for these jeans could be around 4,000. With no guarantee that the jeans will find their permanent home with the second customer, we might as well sign the jeans up for frequent flier miles.

A graphic depicting the map of the United States of America, overlaid with the jorouney of a product sold online, shipped to the customer, returned back to the brand and resold to another customer.
The journey of an online order in the traditional fulfillment and shipping and returns model

Introducing oloround: Rethink the Journey

How can we avoid all of the pain points mentioned above? How do we improve the customer experience, all while reducing the lifetime cost of the jeans?

Thankfully a real solution exists. Oloround has reinvented the post-purchase product journey, focusing on hyper-localization, instant disposition, and efficient returns and reshipment. Returns are not the enemy. Keep returns local, disposition instantly, and reship in ½ the time and ½ the intrinsic cost. Oloround provides a hyper-local 360 logistics experience for e-commerce products. It all starts where everyone else ends; with the return.

First Mile - Returns That Meet 21st-Century Consumer Expectations

Most brands are still processing returns like it’s the 90s! Using oloround, e-commerce brands can offer a modern seamless and convenient experience for their customers, in line with everything else in the 21st century.

When a customer requests a return through a brand’s website, if it falls within the oloround service zone, the consumer will receive an option to select a date/time for pick up right from their doorstep, no box or label required. Creating a hassle-free doorstep pick-up.

Once the item is picked up at the consumer’s convenience, returns partners instantly verify the correct items are being sent back.

Return Disposition - Real-Time and Realistic

The oloround route buddy does the first round of verification, evaluating the item's condition and taking a photo to send back to the brand. Once the item gets back to an oloCrew hub, the item will be dispositioned within 24 hours based on the brand-provided rules and conditions, for example:

  • Added back to inventory and stored locally

  • Resold on a secondary market

  • Liquidated

  • Donated

  • Etc

Local Storage - REALLY Local

If the item is in good condition and can be resold, oloround will store it locally with the oloHub until one of two things happen: 1) the item is resold in the local market or 2) enough inventory is built up that it’s cost-effective for the e-commerce brand to do a bulk shipment back to their warehouse. Both of which are financially beneficial to the brand.

Reship - Cut shipping time by a third

At least a dozen digital shipping aggregators are claiming they offer the cheapest shipping rate because of their relationships with UPS, USPS, FedEx, etc. Yet, all of those items still need to travel hundreds if not thousands of miles to get to the buyer, creating a high minimum cost regardless. Since brands do not have the warehouse penetration of Amazon, the best case for fulfillment and delivery is 4-5 days, the worst case is 8-10 days.

With oloround, if the item is resold in the local zone, an oloCrew member will fulfill the order on their usual routes. Delivery is guaranteed within 72 hours of receiving an order. Simply put - keep everything fast and local.

This leads to cost savings and a sustainable model. The lifetime mileage of the jeans gets cut by two-thirds (in our example; from nearly 4,000 miles to 1,313 miles) or by 99% if looking at only the returns experience (from nearly 2,600 miles to just ~13 miles).

A graphic depicting the map of the United States of America, overlaid with how the oloround jorouney of a product is different after it is sold online, and how oloround shipps to the customer, returns it back and  reships it after it is resold to another customer.
The journey of an online order with the oloround fulfillment and shipping and returns model

The Big Picture

A graphic depicting the product journey with the oloround experience and outlining the three major services offered: Returns and dispositoin, local storage, and micro-mile fulfillment and reshipment.
The oloround Post-Purchase Product Journey

Oloround isn’t just another logistics solution; it's a strategic partner for redefining the post-purchase product journey. By looking at the full lifetime journey of a product, from the moment it leaves the warehouse until it finds its happy home, oloround is aggregating all of the costs into a micro-mile solution and eliminating thousands of miles of negative environmental impact and unnecessary dollars spent. By turning returns from a pain point into a competitive advantage, oloround not only addresses a major market gap, but also sets new standards in customer satisfaction and sustainability.

As brands join-in this retail revolution, e-commerce returns no longer have to be stuck in the last century.

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