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The Season for Gift-Returning

The Season for Gift-Returning


by Pasi Pesonen, Vice President, Product Care Asia Pacific, Sealed Air

Returns are a big issue for online retailers, especially during the holiday season. This is why an effective return policy can make or break a sale, or turn a non-committal visitor into a customer for life. However, many e-commerce companies either fail to realise this, or are unwilling to invest in a proper returns system. Granted, it is an expensive undertaking, with significant investment required for both front-end platform and back-end operations.

But e-commerce companies need a return system, regardless the costs. Otherwise, they will not be able to survive in this competitive market.

In the hands of the shoppers

A recent study conducted by UPS revealed that 53 per cent of shoppers review the returns policy before making purchases. Among customers who review returns policies before purchasing, 60 per cent would be likely to complete their purchase if free store returns were in place or a free pre-paid label was provided by the retailer.

While returns policies first came into force only to cover defective products, the rising demand for customer service and satisfaction has caused unconditional returns within a certain time frame to become common practice. Today, the reason behind returning their puchases could be as simple as the customer changing their mind about the product. Given the rise of e-commerce today, most customers now make purchase decisions sight unseen and tend to return items when they do not match up to their expectations.

Meeting the challenges

To return items, customers will generally repackage their unwanted items and either return it in physical brick-and-mortar stores or ship it back to the company. As one of the most cited return reasons is the customers changing their minds instead of actual physical defects, companies often seek to resell those items to minimise losses. A huge challenge that arises is being able to package the item in such a way that it can survive round trip shipments from the company to the customer and back again without any damage incurred. The customer would have to be able to repackage the item securely and easily as well.

In a similar thread, another challenge is that the rise of e-commerce and thirdparty forwarders has made it easier for customers in this region to obtain products from all over the world. This means that the package can essentially be in transit for up to at least two weeks and would require packaging resilient enough to last through the demands of air freight. If customers use third-party forwarders to ship their items, high costs will have to be passed to the customers if they would like to return the item, which can defer them from even making the purchase in the first place. The perfect return logistics system is one that is highly efficient and uncomplicated. Customers have grown to increasingly expect fast turnover rates of which the company can quickly receive the package and process their reimbursements.

The returns packaging should be a value add that facilitates interaction between the retailers and customers instead of a hassle. Companies need to ultimately ensure that items can survive a round trip.

The danger of under-protecting

Given the vast offerings of other brands – all vying for greater market share, the first impression formed by customers upon opening packages is now more crucial than ever. Under-protecting merchandise runs the risk of the product possibly getting damaged en route to the customer. This is a lose-lose situation for all; the customer will now have a negative experience tied to the brand as he or she will have to take the extra step of returning the item. Brands would then have to exert additional resources and logistics to receive and replace the item.

Globally, the total estimated cost of damaged goods is US$30bn. In a study conducted by Sealed Air in the US, it was found that 81 per cent of consumers, ages 18 to 35, would consider taking their business to a competitor or avoid buying from a brand in the future if they received a damaged item.

The unsatisfied customer will also be more likely to leave a bad review on the store’s mobile site, which can then cause other customers who rely on reviews for purchase decisions to reconsider. Given that 36 per cent of customers in Asia report to read reviews and feedback before purchasing a product, the wrong packaging could easily be a brand’s downfall.

To ensure that the companies can quickly receive the packages to process them for reimbursement, it is ideal that the packages can spend as little possible time in transit. This would mean that the brands would have to have a physical domestic warehouse within the country, and reduce the need for cross-country returns. Given that e-commerce retail giants are looking to increase their presence within the region, for example, Amazon, this seems increasingly feasible by 2020.

Looking to Europe for inspiration

Selecting the right packaging material with the right qualities is important. For example, Sealed Air’s Korrvu Lok™ performance packaging is not only manufactured with a standard corrugated fiberboard frame that is easily recyclable – and complies with international recycling requirements – in the corrugated waste stream, but also has a pop and lock design that reduces operational error, keeps the item in place and reduces the need for void filling materials. As the design is easy to open, reuse and recycle, effortless reverse logistics – should the customer require a return – can easily be made.

The industry should look at the following good practices in Europe:
• Using packaging that can be utilised more than once and reused to return the item.
• Using packaging that only ships and stores flat, but is also the right size, reduces shipping costs for both the company and the consumer.
• Including return address labels with the product when shipping to the consumer to make the process as easy as possible.
• Having packaging that is easy to open and close numerous times without damaging the product.
• Having the ability to return the product locally even though the item may have shipped from overseas.

Implementing a change in packaging is something that can easily be adopted in Asia Pacific by 2020.

About the Author

Pasi has been with the organisation for 26 years. He first joined Diversey in Finland and has since lived in six different countries, successfully serving in several local clusters in Marketing, Supply Chain/ Logistics, Sales and General Management roles. Diversey Care is now a business within Sealed Air.