With all those designer shoes, cutting-edge electronics, and trendy toys shipping into our homes via ecommerce, it’s only logical that sometimes the shoes won’t fit, the electronics won’t work, and the kids will have already moved on to the next hot toy.
The bottom line is that some of the stuff we buy needs to be returned. And that’s known as reverse logistics.
As the offspring of the enormous ecommerce business, domestic shipping returns currently generate about $3 billion annually in revenue for the package delivery industry, and could reach $4 billion by fiscal year 2016. Shipping returns’ first cousin, package forwarding, is also booming as customers increasingly expect more control over when and where their packages will be delivered.
This trend certainly isn’t lost on the industry. FedEx, for example, expanded its reverse logistics prowess with its $1.4 billion purchase of GENCO Distribution System Inc., a third-party logistic provider. And Britain’s Royal Mail is so interested in reverse logistics that it even did a study that profiled the types of people who frequently return online purchases. (Turns out there are four: the returns addict, the duplicate dealer, the bargain hunger, and the swap shopper.)
The U.S. Postal Service also is active in the returns and forwarding markets, and offers a variety of products and services, such as Parcel Returns Service, Bulk Parcel Return Service, and two Premium Forwarding Services – one for homes and one for businesses. Recently, the Postal Service has been promoting its built-in advantage over other providers – its 6-day-a-week delivery and its free package pick-up service.
But can it do more to get its chunk of the reverse logistics market? We think so. Our recent white paper on the topic found several services the Postal Service could offer to take advantage of its strengths. First, it could consider providing digital parcel labels to the growing crowd of smartphone users. With this technology, the customer notifies the merchant of a pending return, the merchant sends a quick response (QR) code to the customer’s phone, the customer then schedules a carrier pickup, and the carrier scans the QR code, prints a label from a handheld device, and takes the package.
Next, warehousing is a big piece of the logistics business as many small businesses lack space to house the products they ship to customers. We suggested the Postal Service put its excess facility space to good use by offering shipping and return services to businesses that have combined inventory storage and shipping needs.
Finally, the Postal Service could offer customers an alternative delivery option in which they could pick up purchases at any of the 32,000 post offices. This would appeal to those who want packages sent to a location of their choosing, rather than wait for the item at home or work.
Are you a frequent returner? What do you look for in returns service? What could the Postal Service do to ease the return or forwarding of goods?