Returns don’t come cheap. Retailers lose one-third of their revenue to return shipping and processing. What’s worse?—returns alone create 5 billion pounds of landfill waste and 15 million tonnes of carbon emissions each year in the United States alone. To cut down on all this financial and material waste, retailers of all shapes and sizes should seriously think about implementing practices for returns consolidation. In this article, we’ll explain what is return consolidation and why it matters to you.
Returns consolidation is the practice of shipping multiple smaller shipments, likely headed to a similar destination, as one combined shipment to reduce your logistics costs and your environmental footprint. For most retailers, returns consolidation can have the biggest impact when dealing with online purchases being returned either in-store or in another boxless fashion.
Returns consolidation helps retailers save on return shipping costs, minimize loss from return shipping damage, and contribute to a more sustainable supply chain.
Returns consolidation eliminates wasted space in truckloads, which reduces the number of trucks needed to transport return shipments.
In freight, shippers aim to avoid less than truckload (LTL) or less than container load (LTC) shipments. Certain costs remain constant with every load, regardless of how full it is, like driver wages, scheduling costs, and fuel surcharges. When a load is full, those fixed costs can be distributed to a greater number of products.
Returns consolidation similarly optimizes transit loads to minimize costs.
The average ecommerce order includes 3.04 items (much of which is due to the fact 41% of shoppers bracket when making purchases). If customers re-use the original boxes for traditional return shipping, that adds up to a lot of wasted space in every return truckload.
Let’s say a customer orders two pairs of shoes to decide between sizes, and needs to return one pair. If the customer uses the shipping box that the order arrived in, there will be wasted space in the return package. Now, imagine an entire truckload of returns where half the space in each box is unused—what you essentially end up with is a half-full truck, and no one wants to put a truck operating at 50% capacity on the road.
Returns consolidation fixes that problem by thinking beyond the box, and aggregating merchandise at a collection point to ensure minimal wasted space on a truckload.
Returns consolidation ensures that each item is properly packed for return transportation, minimizing the risk of damage as items make their way back to distribution centers.
Retailers ship in oversized boxes with lots of padding because the average package is dropped 17 times in transit. Customers, however, may not put the same care into repackaging their returns, leading to previously-undamaged items being damaged during return transit.
Consider the returned shoe example, above.
Even if the customer places the shoes back in the shoebox before packing them, the shoes could get damaged if the lid to the box comes loose—an event that becomes more likely when there’s excess space in the shipping box for return transit. While those shoes may have been in saleable condition at the start of the return journey, they could be damaged upon arrival, resulting in a loss for the retailer.
As much as 15–25% of U.S. trucks are empty, and loaded trucks are 36% underutilized. Capturing even half of this under-utilized capacity would cut freight truck emissions by 100 million tonnes per year. Consolidated shipping earns high sustainability marks because it requires less packaging material and better-utilizes truck space by optimizing every load.
Consolidation leads to faster, easier refunds, which can increase brand loyalty: 92% of customers will make another purchase with a retailer after a great return experience.
Most consolidated returns start with an actual person—often a third party—receiving merchandise for return. Because a person is confirming that the number of items slated to be returned are actually received at the drop-off point, retailers can confidently offer instant or near-instant refunds.
Faster refunds not only improve customer satisfaction, they also decrease expensive where is my refund (WISMR) queries to customer service channels.
Returns consolidation requires front-end intake and processing, which can be handled in-store at omnichannel retailers or through third-party service providers via lockers, collections points, or direct pickup at customers’ homes.
From a returns consolidation perspective, BORIS lets retailers use store staff to facilitate returns consolidation—sorting items for saleability and sending ecommerce purchases to the sales floor or back to the appropriate warehouse for further disposition.
BORIS also continues to drive sales: 62% of customers are more likely to make an online purchase if they can return it in a brick-and-mortar store.
Drop-off points use staff at hubs like shopping malls, department stores, shipping centers, or pharmacies to receive returns. In addition to providing customers with return confirmation, staff at drop-off points can sort returns for final destination shipping according to each retailer’s intelligent dispositioning rules.
Return lockers offer customers greater flexibility in choosing when they make returns, as many are accessible 24/7. Like drop-off points, return lockers use third-party employees to consolidate the returns for shipping.
Home pick-up services send a courier to a customer’s home or office to pick up a return, and drop it off at a courier location. This is a white-glove service that is only available in select markets and the customer must pay a small fee for the pick-up.
Similar to 3PL shipping, consolidation centers utilize a network of warehouses to sort and prepare returned items for resale. This hybrid approach to returns consolidation combines short-distance transport to a consolidation center, followed by long-distance shipping to either a warehouse or store.