Example of distribution node processing returns

Why Retailers’ Distribution Nodes Should Accept Returns

Retailers are growing increasingly savvy about their outbound distribution nodes, leveraging a mix of delivery options ranging from traditional warehouse shipping, to ship-from-store, to buy-online-pick-up-in-store (BOPIS). 

More distribution nodes lead to greater efficiency, sustainability, and speed, while cutting costs—a winning proposition for retailers and customers alike. But are retailers giving the same kind of attention to their returns process? Are each of those distribution nodes equipped to handle returns?

According to a report from the National Retail Federation, the total rate of returns in 2021 was 16.6%—up from 10.6% in 2020—with ecommerce merchandise accounting for 20.8% of all returns. The shipping costs to process that number of returns is astronomical by itself. Factor in lost revenue, increased carrying costs, and the reduced value of returned merchandise, and it starts to become clear why adding return nodes can be so valuable to a retailer’s business. 

Rethinking Return Nodes

When a customer purchases an item in a brick and mortar store, they are (generally) restricted to returning the item to a physical store. Ecommerce, by contrast, empowers customers with more choices like buy online, return in store (BORIS), return by mail, scheduled pickup, or digital returns at a dropoff location.

The first step in optimizing return nodes is identifying and expanding the channels for returns. With a solution like Narvar Concierge, a retailer can tap into a network of return drop-off locations, giving customers the option of a traditional return, a digital return, or even a boxless return. 

The second step in optimizing return nodes is using data to direct a returned item to the most logical processing location, whether that’s a brick-and-mortar store or a distribution center. Remember—an item that ships to San Diego from a warehouse in Cincinnati doesn’t necessarily need to go all the way back to Ohio. 

An item’s return route or destination impacts a retailer’s bottom line. Just as utilizing a network of distribution centers increases speed and reduces outbound shipping costs, using a network of return centers can increase efficiency and minimize the cost of returns.

Smarter Returns Save Money

For omnichannel retailers, BORIS returns are usually the least expensive mode of facilitating returns because a brick and mortar store can immediately reshelve and resell the item. 

Boxless, digital returns at a third-party location may cost more than BORIS, but they cost less—and are more sustainable—than a traditional one-box-per-transaction return. Complete with a prepaid shipping label in each order, the traditional one-box return burdens retailers with up-front printing costs that add up to about $0.10 to $0.15 cents per order.

Improving Customer Experience

Customers don’t just want free returns—they expect them. Moreover, customers expect to receive their refund or store credit quickly. Therefore, maximizing the efficiency of your returns process by adding nodes can greatly improve customer satisfaction long-term. 

Make sure you direct each return to the most logical node based on conditions such as distance, weather, and processing time. Additionally, keep customers in the loop regarding the status of their return—sending automated emails when a return is received at the warehouse, as well as when a refund is issued, is a great idea. 

The Big Picture

Allowing distribution nodes to accept returns increases the likelihood that a retailer will be able to resell a returned item at—or close to—full price. Not only does that benefit the retailer’s bottom line, but it allows retailers to reduce their carbon footprint and improve customer satisfaction, particularly in the current climate of supply-chain disruption.

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