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Betting Big on Returns

The hassle of returns for consumers and retailers translates to a huge opportunity for Posts to dramatically reduce the time, trouble, and cost of returns.

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Betting Big on Returns

Ever returned something you bought online? The process isn’t always clear or easy. First, you have to read a vendor’s returns policy to see if you can even make a return. Then, you must find an adequate box, print a shipping label, and walk or drive to the post office to drop off your package. This process is a hassle to say the least – most young people don’t even own a printer.

Yet the number of returns is steadily climbing every year. 15 to 40% of online purchases are returned and some consumers even buy multiple versions of an item and simply return those that don’t work. At the same time, consumers expect to return items for free. To remain competitive, many retailers have to offer complimentary returns and eat the cost.

And the cost is significant: IHL Group estimated that worldwide, retailers lose more than $600 billion each year to sales returns. Of course, the problem of returns translates to a huge opportunity for Posts. With new technology, Posts are in a position to dramatically reduce the time, trouble, and cost of returns. Below, we outline a few reasons why we believe returns are our next big bet – and how Posts can address the issue of returns in a profitable way.

PUDO

Pick Up Drop Off locations should be a part of every Post’s retail expansion strategy, and they are particularly useful for facilitating returns. PUDO spots give customers access to postal services at third-party locations they normally frequent, such as grocery stores, petrol stations, pharmacies, and more. Instead of planning a trip to the post office, consumers can make their returns while restocking their pantry or filling up their car. This added layer of convenience from having access to multiple PUDO locations convinces more customers to think of the Post for returns, leading to 12% increases in Post profit on average.

Leveraging a PUDO strategy for expanding the retail network is a compelling, low-cost option for Posts. For the third-party retailer, it diversifies their product catalog and increases foot traffic. Organizations with PUDO locations have a 4% reduction in costs and an 8% boost in profit margin. And because transaction data from traditional post offices and PUDO locations are centralized, Posts can also derive actionable insights on how to improve the customer experience and determine where more PUDO locations might be a lucrative investment.

Return Pickups

Posts run routes every day across their massive network. Why not capitalize on that? Many consumers already use a Post app and can simply request pickups directly at their homes. Before the delivery truck arrives, consumers would print out return shipping labels as they normally would and leave their postmarked package outside. The Post delivery driver would pick up the return package and consumers could track the package’s journey straight to the retailer’s return department. This strategy keeps the consumer top of mind and is future-proof. Without an established network like the Post has, this strategy would be difficult for any competitor to replicate cost-effectively.

Partnerships with Businesses, Retailers, and e-tailers

Ecommerce has skyrocketed during the pandemic. Digital Commerce 360 found that COVID-19-related boosts in online shopping resulted in an additional $174.87 billion in ecommerce revenue in 2020, and that’s not going to slow down any time soon. Now is the perfect time for Posts to establish formalized partnerships with retailers, e-tailers, and other related businesses. Shopify is leading the way in the ecommerce space, developing relationships with USPS, UPS, and DHL in the United States, Canada Post in Canada, and Sendle in Australia.

Not only does this type of partnership make for a smoother customer experience, it also enhances a Post’s relationship with merchants. Posts give vendors the ability to schedule overnight deliveries, package pick-ups, purchase shipping insurance, provide customers with tracking information, and facilitate international shipping. Posts who are thinking about potential partnerships with retailers like Target, Samsung, Zara, and more can make huge inroads and capitalize not only on returns, but on deliveries as well.

Conclusion

Shoppers in the United States, the United Kingdom, France, Germany, and Australia all expect free return shipping. In fact, it’s safe to assume everyone values free shipping. The majority of consumers would not make a purchase in the first place if a retailer made them pay for return shipping. But this buying behavior costs an arm and a leg for retailers and is far from a seamless experience for the consumer. The right partnership with a Post can make all the difference.

Posts are clearly in a unique position to upend this paradigm. By implementing PUDO sites, enabling return pickups, and initiating partnerships with world-dominating retailers and businesses, Posts can make returns cheaper and more convenient, all while improving margins for retailers and themselves. To learn more about how to streamline returns, request a free demo from one of Escher’s experts today.

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