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15 Nov 2020

What Are Parcel Return Services and Why Do They Matter?

If your company is engaged in shipping goods to customers, especially if it's an ecommerce retailer, you will inevitably have some products returned from customers. In fact, in online sales, the volume of returns as a proportion of goods delivered can be staggering. It's for that reason that interest in return parcel services is growing.

It's also why specialized reverse logistics service providers, offering comprehensive parcel return solutions, are springing up at a surprisingly fast rate.

To stay on point, though, as the concept of parcel return services is only lately becoming more well-known, we thought we'd create a brief guide. The idea is to explain what parcel return services are and why your business might want to use one.

What is a Parcel Return Service?

In the traditional shopping environment, when customers purchase something and later decide it's not wanted, they take it back to the store from which they bought it. Moreover, returns of this nature are not especially frequent. In a store, the customer typically has a full opportunity to examine the product and make a confident purchasing decision.

Returns to brick-and-mortar stores most often arise because of a faulty product or an issue that was not evident at the time of buying.

On the other hand, online shoppers are much more likely to return their purchases, with ecommerce product-return rates between 15% and 30% higher than those experienced by in-store retailers.

Managing unwanted purchases in ecommerce is more complicated than in traditional retail. After all, there is no store to which the customer can take the item back. Instead, it must be packaged and transported from the customer’s home or business, for delivery back at the origin warehouse or some other location, perhaps even across international borders.

Born for the Ecommerce Era

Many ecommerce companies find the sheer volume of returns, at best, complicated and expensive to manage, and at worst, overwhelming.

The challenge has led to an increase in returns specialization among third-party logistics and fulfillment providers, and spawned a new generation of companies existing with the sole purpose of managing returns as a service.

In essence, then, a parcel return service is an offering from a logistics or last-mile delivery provider that can help your business handle returns from customers. With help from such a service, you can manage the reverse supply chain more efficiently, more quickly, and at less cost than you might currently be achieving. You should also be able to divert some of your resources, previously focusing on returns, to concentrate on order-fulfillment excellence.

Why Do You Need a Parcel Return Service? Here Are 4 Good Reasons

Is your business struggling to develop straightforward processes for handling a multitude of customer returns? Are you finding it difficult to maintain efficient triage efforts? It's not always easy to effectively separate returns that can go back into your inventory for resale, from those that need repair, scrapping, or disposal through secondary markets.

What about the logistics of returning items from customers, who might be located overseas, to the correct location in your business network? The returns issue can be a veritable minefield, and a source of unnecessary waste and expenditure for your company.

The benefits of working with a parcel-return service provider, then, are many, so let’s take a look at some of the most notable.

1. Reduces Product Obsolescence and Depreciation

Many products sold through ecommerce channels depreciate—and even become obsolete—very quickly. Unless you have a fast, efficient process for getting items back to your warehouse or redirected to alternative sales channels, your returning products may lose value.

A parcel return service can reduce lost revenue because it has processes, technology, and facilities to support a fast reverse supply chain. As a result, it can get your products back to you rapidly before they depreciate or become impossible to resell.

2. Reduces Logistics Costs

Reverse logistics is an expensive operation. Even the use of a parcel return service can't alter that fact. However, it can help you reduce costs by separating the processes for handling delivery and return orders. Many companies try to absorb returns into the outbound logistics-management operation. However, this only makes handling returns more costly while diluting the outbound supply chain's cost-efficiency.

By separating the returns operation and entrusting it to a partner, your company can make its outbound logistics flow more efficient and cut the associated operating costs.

Although you will have the parcel return service costs to pay, these will be offset somewhat by savings on your outbound supply chain. You will also have clearer visibility into where your company's money is going.

3. Improves Customer Service

Placing your parcel returns into the hands of a specialist company will give you access to resources and facilities that exist specifically to handle reverse supply chain flows. As a result, you will be able to offer your customers a more flexible returns policy, a more straightforward process, and faster handling.

The resulting benefit is that customers can shop more confidently. It's easier to make a purchasing decision knowing that a return is possible with minimal effort, should it be necessary.

Naturally, encouraging returns is not something you want to do. However, it will help to choose a returns service provider with a technology platform offering comprehensive reporting. That way, you can gain visibility of any customers returning goods on a repetitive basis. Through your returns policy, you’ll be able to decide if you wish to take action against offenders, up to and including the deactivation of their accounts with your online shopping facilities.

4. Helps You Refocus Resources

The fourth benefit of a parcel return service is that it will, as already mentioned, free up some of your business’ precious management resources. Consequently, you may be able to divert some time and effort into working on returns prevention, possibly the best solution to what is—and probably always will be—one of the most perplexing retail challenges.

Because the Last Mile of Delivery is Just the First Mile of Return

So why do parcel return services matter?

Because unlike delivery, you can’t plan and organize customer returns proactively—you can only work to avoid them. Inevitably, though, they will happen, and when they do, the best course of action is to make sure they are processed and executed as cost-efficiently as possible.

A parcel return service provider can help you achieve that, as it specializes in executing returns exclusively. Many such operators are free from the distractions of managing order fulfillment and delivery operations. Those providers that also offer outbound logistics have typically separated their returns service into a discrete enterprise division.

Returns: If You Can’t Avoid Them, Make Them Less Costly

Parcel return service providers also benefit from economies of scale. For example, they can group and consolidate returns for multiple clients when it makes sense. Not only does this enable them to improve your returns flow and customer service, but they could also help drive down your reverse-logistics costs.

After all, returns are unlikely to reduce in volume, so why not do whatever is possible to reduce the amount your company spends on processing them?

In any event, with an understanding of what a parcel return service is—and its benefits—you can make an informed decision about choosing one with which your business can work. Even if now is not the right time to do so, we hope the information we've provided will help you make such a decision in the future.