Fullfillment Tip-The hidden cost of returns…
WTN Services-1800Flowers is committed to helping our clients reduce expenses, improve their margin and enhance the consumer experience. A consumer is excited when they place a winery order and are eager to recieve thier order. A challenge with wine deliveries is the need for adult signature for delivery. The adult signature requirement adds to the risk of non-delivery or additional delivery attempts.
According to UPS Logistics, “the average number of consumer order returns in general retail runs from 2.5% to 3%. Wine returns due to the added issue of the adult signature requirement can increase this return rate to as high as 5%.”
What is the impact of the return on you the client?
1.) The customer is frustrated due to not receiving the product causing a potential lost sale or lost future sales.
2.) Increased cost of business as the carriers pass along a returns delivery charge and most fulfillment houses charge a returns processing and restocking fee. (WTN’s is the lowest in the winery fulfillment industry or the major fulfillment companies)
3.) If the consumer still wants the wine there is a reship fee and transport fee so in reality you are charged for transport due to three trips but the consumer paid for one. The result is a purchase that is no longer profitable to the average winery.
Profit Impact: The average return for a 2 pack of wine can cost the winery as much as $40.00 or more in delivery and reship fees when factoring initial shipping charges, returns shipping charges and reship charges all passed to the winery by the carriers both UPS and Fed Ex. On a wine club consisting of 500 members if 5% if the shipments return and are reshipped that would be an expense of $1120.00 in servicing that return,not counting your labor in facilitating the customer contact concerning the return.
What to do?
Tip to Ponder: WTN has introduced Package Management Delivery Techonology providing delivery attempt detail on every package shipped simply by logging into our Winelink Portal. Added to that is the ability to send a branded message reminder to the consumer of missed delivery attempts. Additionally this technology upgrade allows our winery client to monitor and note action taken by your staff as related to that return. You could send an email first missed delivery attempt, call the consumer second and ensure delivery on the third attempt.
Positive Customer Experience-Positive Profit Impact…
Clients in testing that have taken advantage of this technology and better managed returns have seen their returns drop by as much as 50%. Imagine a 50% improvement on returns. For a 500 member club shipping 6 times a year the positive profit impact would be aproximately $3,000.00 annually of charges negated by a proactive use of techology and support from WTN and the added benefit is more customer satisfaction. For wineries taking advantage of this technology with larger clubs the savings can runs into the thousands.
Returns are the hidden cost that creeps into profitability and customer satisfaction when not handled proactively. Stay tuned to further fulfillment tips to improve the customer experience and improve your bottom line results.