Luncheon Keynote. Dennis Nicoski A/Senior Vice President, Sales and Customer Relations U.S. Postal Service

Transcription

1 Luncheon Keynote Dennis Nicoski A/Senior Vice President, Sales and Customer Relations U.S. Postal Service

2 Exploring the Next Generation of Consumer Returns Dennis Nicoski Senior Vice President, Sales & Customer Relations United States Postal Service Return to the Future Arlington, VA September 20,

3 EXPLORING THE NEXT GENERATION OF CONSUMER RETURNS RETURNS ARE A NECESSITY CONSUMER EXPERIENCE PAST, PRESENT, & FUTURE POSTALVISION 2020/RLA: RETURN TO THE FUTURE 3

4 EXPLORING THE NEXT GENERATION OF CONSUMER RETURNS RETURNS ARE A NECESSITY CONSUMER EXPERIENCE PAST, PRESENT, & FUTURE POSTALVISION 2020: RETURN TO THE FUTURE 4

5 E-commerce is growing E-commerce growth has exploded over the past few years and is poised for continued growth. $388B $339B $297B $260B $229B $199B $169B U.S. Retail E-Commerce Sales $448B $525B $600B $684B * 2019* 2020* 7x Online sales growth dwarfs that of the retail industry as a whole, with growth rates 7x that of total retail. 2 $1B+ $1B+ days are the new norm Cyber Monday was the highest spending day ever, exceeding $3B for the first time. 3 48% of retailers ship between 21 and 100 online deliveries per week. 4% ship 10K+ deliveries per week Retail E-Commerce Sales Report. U.S. Census Bureau US Retail Ecommerce Sales, emarketer. May Retail Trends. Strategy& PwC State of the U.S. Online Retail Economy. comscore The State of Shipping in Commerce. Temando

6 Cross-border demand Consumers are increasingly shopping beyond their borders, and the U.S. has become a prime destination for global online shoppers. 1 45% $1T of global shoppers look for U.S. goods online. 1 in expected cross-border B2C e-commerce sales in Canada and UK are top destinations for US-based e-commerce sales. Western Europe and eastern Asia are other popular destinations. 3 Top Countries for Cross-Border Selling (from U.S.) Improvements to visibility and cost barriers are inevitable and will drive cross-border selling. 3 Top Drivers for Cross-Border Selling (Globally) Canada 72% Free shipping 46% UK 54% Secure way to pay 44% Mexico 41% Items that are hard to find locally 40% 1. PayPal Cross-Border Research National Retailer Federation Retail Big Show Accenture & AliResearch 2015 National Retailer Federation, Retail Big Show PayPal Cross-Border Merchant Research 2016 USA Report PayPal. 6

7 Returns are the new normal Returns have become a necessity, fueled by the growth of e-commerce, and volume will only continue to grow as online shopping lacks the touch and feel experience. Americans returned over $100B in e-commerce purchases in Shoppers return online apparel purchases 8x more frequently than in-store purchases. 3 $100B+ In 2017, between $113B and $132B of e-commerce purchases were returned. vs. 148M USPS handled 148M package returns in FY16. 25% 3% return rate for online purchases return rate for in-store purchases 1. Riding the Returns Wave: Reverse Logistics and the U.S. Postal Service. USPS OIG. April Retail Trends. Strategy& PwC

8 Returns touches everything A number of different industries must optimize their returns processes to ensure success. DEFECTIVE PRODUCTS Recall Results, Stericycle RECYCLING Alcoa, Clover DIAGNOSTIC TESTING EverlyWell, 23andMe HOME TRY-ON Warby Parker, Stitch Fix RETURNS RENTAL RETURN Le Tote, Rent the Runway TRADE-IN Asurion, Tekovery END OF PRODUCT LIFE Apple, Dell Computers 8

9 Our business customers are looking for a better experience Businesses want to meet the needs of their customers, but they also need affordable, flexible options % 70 % I want to be able to track my return every step of the way. I want to know where it is every time I need to track it. of small businesses receive returns requests on a regular basis (daily, weekly, or monthly). of small businesses say their business pays for their customer s returns. - USPS Small Business Customer 1. USPS Small Business Customer Survey Returns Experience. March

10 EXPLORING THE NEXT GENERATION OF CONSUMER RETURNS RETURNS ARE A NECESSITY CONSUMER EXPERIENCE PAST, PRESENT, & FUTURE POSTALVISION 2020: RETURN TO THE FUTURE 10

11 Returns of the past The typical customer was expected to overcome lots of tiny inconveniences to satisfy an extra business expense. Same channel as purchase Unopened package Provide physical receipt One week from purchase Extra paperwork Forced to justify return Customer pays restocking fees 11

12 Returns of the past The typical customer was expected to overcome lots of tiny inconveniences to satisfy an extra business expense. Same channel as purchase Unopened package Provide physical receipt One week from purchase Extra paperwork Forced to justify return Customer pays restocking fees Yet the business may have been the cause of the return in the first place. Return Reasons Across the World 1 $162M Defective / poor quality $99M Bought wrong item $89M Buyers remorse $83M Found better price elsewhere $64M Gift returns 1. IHL Group/Order Dynamics Hefty Returns WWD. July Amount of merchandise returned. 12

13 Returns of the present Every step created friction that risked losing the customer. 1 Same channel as purchase Unopened package Provide physical receipt One week from purchase Extra paperwork Forced to justify return Customer pays restocking fees 22% 53% 82% 53% 62% 72% 84% will not make purchase if they cannot return to store keep unwanted items to avoid the hassle of returning them who returned an item were repeat shoppers of the retailer said a 30-day return policy is fair are satisfied with returns if the process was really easy say no questions asked policy make them more likely to buy say restocking fees prevent them from making purchase 1. Making Returns a Competitive Advantage. Navar. June

14 Returns of the present Now the customer has an easier experience with a variety of new returns options meant to keep her businesses. Same channel as purchase Return online or in store Unopened package Provide physical Trial use receipt before returning One week from purchase Extra No paperwork receipts required Forced to Customer pays justify returnbusiness restocking takes fees on returns cost Generous return times Transparent status updates Immediate refund Returns has become a competitive differentiator that businesses must use to attract and retain customers. 14

15 Yet returns can still be a challenge for businesses While the industry looks to the future, some businesses are stuck on present challenges. Pinched business budgets Rising transportation costs are making businesses more price sensitive. Returns are expensive It can cost 2-3x more to return a product than deliver the original package. 1 Drivers wanted A trucker shortage has caused freight rates to increase 28% over SPLY. Uncertain financial impact Some businesses struggle to understand how returns impacts their bottom line. Guessing game 27% guess or cannot measure the financial impact of returns. 2 Fear of foul play Fraud by bad actors is a legitimate concern. Some estimates put domestic return fraud at +$9B a year. 3 Complicated logistics Businesses invest in a complicated processing system and then have to do it in reverse. Do-it-yourself approach 64% handle some returns in-house while only 40% contract to a 3PL.2* Inventory management struggle Only 42% of businesses believe that they handle their returns process and technology well or extremely well Turn your reverse supply chain into a profit center. Supply Chain Quarterly. Q Reverse logistics still a puzzle for omnichannel retailers. DC Velocity. Nov Recognizing Return Fraud. National Retail Federation. March *Respondents were allowed to select multiple responses. 4. Multichannel Fulfillment and Returns Survey. MetaPack. Q

16 EXPLORING THE NEXT GENERATION OF CONSUMER RETURNS RETURNS ARE A NECESSITY CONSUMER EXPERIENCE PAST, PRESENT, & FUTURE POSTALVISION 2020/RLA: RETURN TO THE FUTURE 16

17 Returns of the future The returns ecosystem is evolving to address the increasing demand for a seamless experience. INCREASING EFFICIENCY Label innovations Rapid refunds Dynamic routing International platforms ALTERNATIVE CHANNELS Returns concierge Parcel lockers In-store returns DISRUPTIVE TECHNOLOGY Augmented reality Blockchain Artificial intelligence USPS is actively working to partner with those revolutionizing the customer experience in the Returns market. 17

18 INCREASING EFFICIENCY 18

19 Label innovations Eliminating the need for a label to return an item. Labels are an extra cost on retailers and consumers do not want the hassle of printing or attaching a return label. Outcomes Retailers save on label costs and can expedite reverse logistics Providing return labels costs $0.25-$0.40 cents per package, whether a return is initiated or not. 1 Customers have a more seamless returns experience 1. The Essential Guide to Retail Returns. Navar. June

20 Give the customer some credit Offering customers refunds before the merchant receives the return. Consumers want faster refunds. Retailers want these customers to buy other products with their credit. Outcomes Consumers no longer wait for refunds on returns In a recent poll of 100 leaders in online retail, 77% said speed of credit is the most important return issue for their customer. 1 Quick credit/refunds incentivizes repurchase from the same brand Quick credit/refunds incentivized repurchase from the same brand Harvest valuable returns data that grows revenue and reduces fraud 1. Turn your returns into returning customers. newgistics. October

21 Dynamic routing Flexible routing and triage that optimizes the destination of a return. Businesses do not want to pay the costs of processing a return through their entire supply chain only to send it again to a reseller/recycler. Outcomes Returns can be verified, redirected, and repurposed more quickly 44% of U.S.-based online retailers said a rising rate of returns has negatively affected margins. 1 Transportation and labor costs can be reduced on returns Quick credit/refunds incentivized repurchase from the same brand Goods are routed to where customer demand is highest 1. The Cost of Returns. emarketer. March

22 International returns platforms Offering platforms and technology solutions to process returns across the globe. The e-commerce market is global and international returns present unique challenges to businesses. Outcomes Offering returns is no longer a barrier to entry into foreign markets 45% of global retail supply chain professionals cite cross-border logistics as their primary challenge. 1 Consumers can shop with more confidence and options 1. Challenges that Retail Supply Chain Professionals Face. emarketer. February

23 ALTERNATIVE CHANNELS 23

24 Returns concierge Providing a service where customers can drop returns without much preparation. Preparing and shipping returns inconveniences customers and is expensive for businesses. Outcomes Spares customers from the arts and crafts nature of prepping return 71% of consumers said a positive returns experience greatly encourages them to shop at a store again. 1 Retailers can ship returns in bulk and save through consolidation Returns can be repurposed or recycled for restocking 1. The 4 Trickiest E-Commerce Returns Challenges And How to Solve Them. Sidecar Discover

25 Parcel lockers Conveniently located spaces for customers to securely drop returns. Customers want more flexibility to choose where they return an item. Outcomes Customers are able to return items at convenient locations Provides an additional (and potentially cheaper) return option Although 68% of online returners have shipped items back to the retailer, 60% prefer to return items to a physical store when given a choice. 1 Businesses can partner to use physical space more efficiently 1. The Amazon Effect on Reverse Logistics. DRS Product Returns. January

26 In-store returns Offering and incentivizing quick and easy returns at the brick-and-mortar location. Customers want the in-person assurance their return is accepted and the chance to search for a replacement item. Outcomes Saves customers time and money on returns Nearly 1/3 of customers say they like returning an item in-store because they can then shop for other items. 1 Retailers reduce returns costs Drives additional in-store foot-traffic that can lead to new sales 1. Making Returns a Competitive Advantage. Navar. June

27 DISRUPTIVE TECHNOLOGY 27

28 Augmented reality & artificial intelligence Simulating the in-store, physical shopping experience for customers. Consumers have imperfect information when shopping online. Retailers want their customers to keep the items they purchase. Outcomes Customers can evaluate items with increased accuracy Some retailers have increased net revenue 5% by using AI to improve online fit accuracy and reduce returns. 1 Retailers can offer a differentiated e-commerce shopping experience The likelihood of returns can be reduced 1. True Fit

29 Blockchain A decentralized ledger that uses peer-to-peer consensus to verify and authenticate all information recorded within the ledger. Retailers want visibility into their returns process to limit fraud and mistakes. Outcomes Traceability, data visibility and reconciliation are improved Returns fraud costs retailers roughly $15B to $22B globally each year. 1 Credit processing is faster and fraud is reduced Products are authenticated and a virtual warranty is established 1. Reverse Logistics Magazine. Edition

30 Exceeding customer expectations is critical to our collective success We put our strengths to work for you. Enduring partnerships and expertise Convenience of our nationwide access Established and evolving delivery infrastructure Secure technology infrastructure Emphasis on sustainability Innovative and customized solutions 30

31 THANK YOU 31