According to this study, return pickup and delivery costs can amount to as much as 1 to 10% of total supply chain costs. If you want to make your returns process more cost-effective, you have to place extra focus on optimizing specifics such as pickup points. Optimizing return pickups requires an understanding of the complete supply chain. You have to be able to view returns on a mass scale, so you can choose the best pickup points and assign drivers to manage those routes. This post describes how you can optimize the mix of service pickup points and home pickup points. But before we explore that in detail, let’s understand why optimizing returns matters.
Why returns matter
Earlier, returns were the least thought about part of a supply chain. Executives would focus on optimizing shopping and user experience to increase purchases. Barely any brand gave a thought to what would occur after the purchase. Since then, driven by competition, brands have begun to optimize the post-purchase experience by same-day-delivery and no-risk-return programs. These days, the return experience forms a very important part of the brand experience. In fact, customers prefer to purchase from brands that have a great returns experience. Here’s a list of reasons why you should care about returns.
- Customer retention – Retaining customers in today’s competitive market is hard. Small details, such as optimizing your returns process could mean the difference between success and failure.
- Increased sales – Customers who appreciate your returns experience are more likely to buy from you again in the future. In fact, happy customers are more likely to have greater customer lifespans.
Understanding the pros and cons of possible pickup points
When working with a large customer base spread across diverse geographies, you should be open to working with different types of pickup points. The two major types of pickup points include home pickup and service pickup. So, what should you choose? Can you create an optimized ratio of home and service pickups?
- Brick and mortar pickup points – Many eCommerce websites work with their own and others’ brick and mortar stores for product pickup and deliveries. In fact, a good number of customer prefer doing pickups and dropoffs from such centers because of the in-store experience.
- Home pickups – Many eCommerce websites also offer home pickups and drops. Customers who choose this option value the convenience of receiving products at home.
Clearly, service pickups are beneficial for your company, because you can save on the cost of having to visit each person’s home. However, not all customers are enthusiastic about service pickups. So, as an operations manager, what should you do? Should you push for service return pickups or focus on home pickups? Ideally, you should mix both to ensure return efficiency.
How to efficiently mix service and home return pickups
If your brand has brick and mortar stores in big areas, you can rely on them for easy return pickups and deliveries. Alternatively, you can also use logistics service centres for pickups and deliveries. The question is how to decide when to choose this option over home pickups?
- You can use the distance between your customer’s home and a service pickup point as the frame of reference to decide when service pickups are okay. If the distance is under 5 miles, your customers may not mind dropping off the product.
For customers whose homes are further than 5 miles away from a service pickup point, you can provide the service of home pickups.
- You can also consider the number of returns a customer has made and the total business they have given your company to decide when to provide home return pickups. If a customer has given you less business but cost you with a high number of returns, request them to return items to a service pickup point.
This factor could deter their desire to return products, ensuring that you lose less money to each customer. Want to make your returns system efficient? Decide how to optimize your mix of service pickups and home pickups. This post can help you get started.