If you were warming up your omnichannel and e-commerce fulfillment drone fleet, ready to prove to your customers that your customer service is unchallenged … you can ground those bad boys (for now) and turn to more traditional means to improve your online customer satisfaction and sales levels.
Free shipping and easy returns are clearly the message being sent in a just-released survey conducted by UPS and comScore. These customer demands are not new and clearly identify the issues that today’s retailers need to be driving in their omnichannel and e-commerce warehouse and distribution center order fulfillment practices.
Free Online Order Shipping!
Customers are willing to take actions in order to receive free shipping. For example over 50% selected longer transit times in order to receive free shipping with 83% electing to add up to two additional days. 58% increased their order size to qualify for free shipping.
What are the issues stopping your organization from offering free shipping today? Likely, the reasons are margin erosion and loss of profitability. Shipping isn’t free … certainly not to the retailer. Free shipping is merely a sales and marketing strategy to appeal to the customer, but the costs are still there to be borne by the retailer.
The real question is how can you reduce your operational costs to provide free shipping without impacting your bottom line? In fact, by creating the means to implement free shipping, most retailers find a dramatic increase in their volumes. Increased sales always amplify the benefits of new operational efficiencies.
We start by reviewing processes and material handling equipment and systems used for order picking, packing and shipping. The goal is to find the means to reduce labor, space, inventory levels and shipping costs while improving accuracy and order cut-off times.
Just a few of the tell-tale signs and indicators that efficiencies can be found to offer free shipping:
- As many or more order packers than there are order pickers.
- Not hitting 99.7%+ in order accuracy levels.
- People holding piles of papers and looking into boxes and orders.
- Inventory stacked on carts, in aisles, in rooms and any place else it doesn’t belong.
- More than eight feet of clear space between where people are working and the ceiling.
- 15% annual increase in SKUs and inventory.
- Spending too much time recruiting and training new and temporary personnel.
There are many more, but these issues are indicators that there are processes and equipment not aligned to benchmark levels that, when implemented, the increased savings helps offset and pay for the free shipping costs. It’s all about the return on investment and internal rate of return which helps organizations grow and hit that next level.
Return Policies Make or Break the Online Purchasing Decision
The survey clearly shows that consumers are looking at how they are going to return the items they purchase even before they push the “Buy Button”. Over 66% of the consumers taking the survey read and analyze the retailer’s return policy before they purchase. This is higher by several percent over the same question that was asked in 2013.
Over 80% said they would complete the purchase if they could return the order in a local store location or have free shipping. Likewise, having a pre-printed and preferably pre-paid shipping label with the order is also identified as a must-have by 82% of the respondents. These numbers are huge and mean retailers need to focus their attention on meeting these demands before they become irrelevant in the market place.
Free Return Shipping
Increasing the efficiencies of the operations, just like in the order picking side, is the key to being able to offer free returns. The financial liability for this element needs to be projected and calculated very carefully. Your product, site functionality and customer profile will dictate dramatically the rate of returns and their cost. Regardless, handling returns quickly and efficiently will be the key to being able to offer free returns. In this equation, also calculate that free shipping and returns usually mean orders with higher SKU count just so the customer can try on the pieces and return the items that don’t fit. Higher sales, higher costs … the trick is balancing the two and reducing costs to increase profitability.
The low lying fruit identified by this survey’s result is the need to have return labels pre-printed and inserted in the order. Doing this the manual way would not only include paper and printer supplies, but labor to find and insert each label in the correct box and another quality control checker to verify the accuracy. This process is costly and wasteful.
Return Label in Every Order
A simple cost-effective solution is using an automated printer and inserter system. These systems will automatically print and double verify the document or label to the exact order and can do up to 3,000 orders an hour per unit. Integrating multiple units allows the throughput to be proportionately increased. These systems start for as little as $29,000 and usually provide a return on investment of under a year and often can be integrated and operational over a weekend.
So we’ve solved the return label in each order problem quickly and easily. The next part of this puzzle is returning items to brick and mortar stores.
Omnichannel Order Returns
Retailers with a physical store presence need to focus on a true omnichannel experience. The need for an integrated software solution that provides total transparency throughout the extended organization helps convert stores into a return receiving stations. The focus here should be the ability to take back a return at a store, induct it into inventory and be able to sell it at that physical location, at another store or put it online for sale and ship it to another consumer. This is a large under taking, but one that can be accomplished by taking bite-size steps, benchmarks and time frames to execute. Each step is valuable for improving customer satisfaction and reducing costs and each step needs to be carefully implemented and measured to assure success.
Integrated Systems Design – ISD is a leading consultant, designer, manufacturer and integrator for order picking, order packaging, order shipping and manufacturing operations for warehousing, production, distributing and retailing organizations in North America.
ISD systems are renowned for their tremendous value, reliability and ease of maintenance. Systems are designed using technologies from the leading material handling manufacturers of the world. Solutions designed by ISD focus on providing space savings, increased productivity, reduced labor, enhanced accuracy and system flexibility to change as an operation’s activities change over time. For more information contact ISD at 248-668-8250 or email sales@isddd.com.