Dr Jonathan Gorst SHU
Customer's bedroom is the new changing room; a stock room for purchases. Fetching a product back can be far more difficult than sending it out. We have very liberal policies on returns in the UK The logistics sector is like a swan, a beautiful creature but under the water giant webbed feet with great power.
Dr Mike Burnon, Cranfield Business School
Returns are increasingly part of the consumer decision process (CDP) ‘service level for returns needs to match the buying process.
Anthony Baldwin, Head of Returns Shop Direct
Shop Direct handled 1.7 billion sales in last 12 months, 52% of those sales were purchased by mobile device - return products are credited asap so a customer can shop again. - We have data to identify high returners, we need to view the lifetime value of each customer, data is key to this process. There is no such thing as a profitable return but it is an entry fee to sales and satisfaction.
Mark Catley, business development director XPO, UK & Ireland
70 million total returns. ‘Return logistics is when a customer reconsiders a purchase, garment size choice is a perfect example. How do you get maximum value from a return product? We have to ask, why to products get returned? Is it the wrong item, does it look different from the photo, is it damaged? Peak season in returns is driven by weather.
IOC Tracey Worth with Mark Catley XPO, Anthony Baldwin Shop Direct, Dr Jonathan Gorst SHU and Dr Mike Burnon Cranfield.
Jill Stewart, head of the SHU faculty...
...welcomed over a hundred guests to the reverse logistics conference. Three speakers, a Cranfield academic and then two practitioners from Shop Direct and XPO before an energetic Q&A for a stimulating vision of dealing with returns in an omni-channel world.
Dr Mike Burnon, Cranfield senior lecturer and chair of logistics sustainability...
...opened with the question, ‘How many of you have returned goods ?’ It was a healthy show of hands. ‘Omni Channel evolution has mushroomed numbers in return logistics. Dr Burnon ran an example of forward logistics at Magna Park by John Lewis, robots, automation, organisation. Turning to returns, the slides showed chaos, variation in packaging & lots of damage. Dr Burnon was part of a group that had built a toolkit to deal with the management of returns. 9 key themes with a traffic light system to highlight issues. Performance and good practice was dependant on three items. 1st the avoidance of returns. 2nd Management of the returns and 3rd Product dispositioning. (Getting value from the product returned, when not back to stock, selling to a third party). ‘Black Friday will create huge returns.’ Dr Burnon showcased a survey ‘you need slick returns to hold your margin.’ Then comparing the variation of returns across types of goods, clothing, electricals and then low returns in high value items. A case study on two shoppers, A spent nearly 50k, B spent 12k over the year. A made many returns, when adding cost to the returns there was more profit from B who only returned one item in the year. ‘Identifying customer profile in high returners is part of the management to achieve better margin.’ Looking at different channels, ‘How do you deal with click & collect that is not collected? There is also click and collect paid for that is never collected’ Key message. ‘Returns are increasingly part of the consumer decision process (CDP) ‘service level for returns needs to match the buying process.’
Anthony Baldwin, head of returns at Shop Direct (Littlewoods Index).
Anthony was a practioner who had moved from bricks and mortar retail via catalogue to e-retail. ‘Shop Direct handled 1.7 billion sales in last 12 months, 52% of those sales were purchased by mobile device. Our target shopper, ‘and she is real’ is a working Mum who values cost and quality.’ Shop Direct returns are handled in an old mill in Oldham called Raven, 500 staff with a further hundred agency team via Blue Arrow to handle spikes. Approx. fifty thousand returns a day, the old fashioned nature of the building suites the return as it passes between floors. ‘Return products are credited ASAP so a customer can shop again.’ 450 million pounds of returns in 12 months. ‘All that matters is free returns and a quick credit. We allow free returns as a selling point, it’s an ethos from our catalogue heritage. The objective is to run a very efficient returns system. ‘We make returns easy at Shop Direct. Yodel is our partner in collecting the returns. While forward logistics peak is pre-Christmas, our peak on returns is post-Christmas. Our return to stock target is 95%. We have our own clearance site and 2% are sent back to manufacturer.’ A case study example of returners identified three trends, 1. The weekender, purchase arrives Friday and goods returned Monday. 2. Changing rooms, multiple colours or styles purchased and returned. 3. Changing sizes, various sizes purchased and then sent back. ‘We have data to identify high returners, we need to view the lifetime value of each customer, data is key to this process. There is no such thing as a profitable return but it is an entry fee to sales and satisfaction.’
Mark Catley, business development director XPO.
An MBA from Henley school of management, 21 years in the sector from Christian Salvesen to Norbert and XPO. ‘XPO is 15 billion pounds of revenue, 84,000 employees, we are about the second-largest logistics company. UK & Ireland accounts for a billion pounds of turnover, 7389 vehicles, 250 million e-retail items this year. 70 million total returns. XPO use the backtrack system. ‘Return logistics is when a customer reconsiders a purchase, garment size choice is a perfect example. How do you get maximum value from a return product?’ ‘You can strip products, recover hinges from cabinets, shorten damaged worktops.’ ‘There are four challenges, warehouse space, carriers, systems and people.
- Warehouses are in short supply in the UK.
- Systems, complexity and volume are growing.
- Carriers, they catch a lot of bad press but they are the foundation to e-commerce and they are getting the job done on very tight margins.
- People – peaks are a huge challenge to people numbers, availability & expectation, when I visit a warehouse I look for the car park and see if there is a local bus route.’
We have to ask, why to products get returned? Is it the wrong item, does it look different from the photo, is it damaged?’ XPO now have CCTV in the packing areas to prove the correct goods were packed and left the premises undamaged. ‘Consumers need to be sure that returns process works & they will be credited quickly. Twitter has a huge influence, feedback has a big influence on the next shopper.’ ‘Even if returns cost money they increase long term profitability. Peak season in returns is driven by weather, we had particularly bad snow two years back, returns were late, last year consumers ran purchases earlier to come inside Christmas with returns, it’s a cycle driven by weather.’ Mark went onto to look a future issue, geographic clusters around the world, products from China sold in UK, to return to China or re-enter the market in Europe, retail clusters across continents, Americas, Europe, East, this will be a key issue in the next five years.’
An energetic Q&A followed, chaired by Jill Stewart, faculty head SHU
‘returns driven by garment size choice, there are apps to map your body shape, they are not well taken up by the consumer. Some retailers will choose the size for a regular consumer. Do we need to punish consumers who are identified as high returners? Packaging is not always designed for e-retail – shoe boxes are perfect for store, they are soon squashed in the home delivery supply chain, shoes rarely damaged but the retail image is poor. Shop Direct we are often boxing garments rather than hanging, this skews our figures when identifying clothing e-retail.’
Return logistics, an IOC workshop led by Dr Jonathan Gorst, Sheffield Hallam University
Avoidance of returns. If we can more effectively manage the return of goods. We need to reduce the level of returns experienced. Returns management is a solution, logistics cannot be perceived as free... I have Identify effective product return processes and networks to minimise logistics costs and maximise asset recovery and this is a free toolkit available to you all. Product dispositioning. Considers the options for product disposal that maximise asset recovery while minimising the impact on the environment. Omni Channel shopping - leading to an increase in 'postal' delivery / returns. Complexity. The bedroom - the new changing room a stock room for purchases. Fetching a product back can be far more difficult than sending it out. We have very liberal policies on returns in the UK, chance if a return comes back it comes back within two weeks. Looking at clothing, electronics and homewares logistics I have seen return rates as high as 40% Retailers are telling us when you make an electronic purchase it’s not an impulse buy, it’s a researched buy. Customers may touch and feel in the retailer and search price on the net’ A customer comment, we are Omni-channel at the front-end to the customer, but multichannel in the back-end processes.
‘The sector is like a swan, a beautiful creature but under the water giant webbed feet with great power.
Dr Mike Burnon, Cranfield, ‘what is Omni channel shopping?’
Mark Catley XPO ‘the XPO returns service’
