XPO Logistics: the challenges of online returns
With the festive season truly over for another year, consumers begin to return their online purchases, XPO Logistics discusses why more retailers are looking to 3PLs.
When it comes to the festive season, XPO Logistics highlights that returns are as much a part of the season as much as the buying process. “In fact, 20% to 30% of the purchases shoppers make online will be returned after the holidays, compared to 8% brought at brick and mortar stores," says XPO Logistics.
What does this mean for retailers?
E-commerce has been consistently seeing high growth over the last few years, with high peaks in the lead up to Christmas. However, with returns going hand in hand with this high spending peak, XPO Logistics sees this volume creating new challenges for retailers.
The biggest challenge for retailers is the complicated returns process. Specifically, how a return is handled is just as crucial for building brand loyalty as the initial purchase phase, therefore it is crucial for retailers to make this process as quick as possible. In addition to brand loyalty, returns that are completed too slowly can create a situation where the products do not return to the shelves in enough time resulting in price reductions.
What is the cause of a slow returns process?
When packages are returned they tend to come back with excess packaging, in different sizes and have different paperwork to process, and "while an inbound truckload of products from a supplier can take as little as two to eight hours of sorting, it can take up to 48 hours to process a truck full of returns because each item has to be individually checked. All in, processing a return requires 20% more space and twice the labor as sending out a package," says XPO Logistics.
As a result of these challenges, XPO Logistics has seen a spike in retailers turning to third-party logistics providers (3PLs) such as XPO Logistics to handle their returns.
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Uber Freight to Acquire Transplace in $2.2bn Deal
Uber Freight is to acquire logistics technology and solutions provider Transplace in a deal worth $2.25bn.
The company will pay up to $750m in common stock and the remainder in cash to TPG Capital, Transplace’s private equity owner, pending regulatory approval and closing conditions.
“This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem,” said Lior Ron, Head of Uber Freight, and former founder of the Uber-owned trucking start-up Otto.
Uber’s Big Play for Supply Chain
Transplace is one of the world's largest managed transportation and logistics networks, with 62,000 unique users on its platform and $11bn in freight under management. It offers truck brokerage and other capacity solutions, end-to-end visibility on cross border shipments, and a suite of digital solutions and consultancy services.
The purchase is the latest move by parent company Uber, which launched as a San Francisco cab-hailing app in 2011, to diversify its offering and create new revenue streams in all transport segments.
Transplace said the takeover comes amid a period of “accelerated transformation in logistics”, where globalisation, shipping and transport disruption, and widespread volatility are colliding.
Uber Freight plans to integrate the Transplace network into its own platform, which connects shippers and carriers in a dashboard that mirroring the intuitive experience found in its consumer vehicle booking and food ordering services.
“This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most,” said Ron.
Frank McGuigan, CEO of Transplace, said the resulting merger will offer enhanced efficiency and transparency for shippers, and benefits of scale for carriers. “All in all, we expect to significantly reduce shipper and carrier empty miles to the benefit of highway and road infrastructures and the environment,” he added.
History of Uber Freight
Uber Freight was established in 2017 and separated into its own business unit the following year. In 2019 the company had expanded across the entire continental US, established a headquarters in Chicago. Later that year it launched its first international division in Europe, initially from a regional foothold in the Nertherlands, and later moving into Germany.
The logistics spinoff attracted a $500m investment from New York-based Greenbriar Equity Group in October 2020, and launched a new shipping platform for companies of all sizes in May, partly in response to a driver shortage in Canada.