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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Cainiao Network Launches Customer-Centric Logistics
As the logistics division of the Alibaba Group, Cainiao Smart Logistics Network has decided to provide its Southeast Asian customers with unsurpassed service during its annual shopping festival. Based on customer feedback surveys, the company will expand its real-time customer service support and speed up delivery times. ‘By expanding and deepening our services, we aim to provide a stronger logistics infrastructure that can bolster the booming eCommerce sector, support merchants’ expansion into new markets and diversify retail options for consumers’, said Chris Fan, Head of Cross-Border, Singapore, Cainiao Network.
Who Is Cainiao?
According to TIME Magazine, Cainiao ‘is far from a typical logistics firm’. The company controls an open platform that allows it to collaborate with 3,000 logistics partners and 3 million couriers. This means that merchants can choose the least expensive and most efficient shipping options, based on Cainiao’s real-time logistics analytics. The company’s goal is to ship packages anywhere in the world in under 72 hours—and for less than US$3.00.
For countless small business owners around the world, from coffee-growers to textile-weavers, this could change everything. Usually, it costs about US$100 to ship a DHL envelope from Shanghai to London in five days. Cainiao aims to change that. Said its CEO Wan Lin: ‘The biggest barrier to globalisation is logistics’.
What’s Part of the Upgrade?
Throughout the Tmall festival, Cainiao’s logistics upgrade will be divided into four critical segments:
- Real-time customer service support. Cainiao has launched a direct WhatsApp channel for customers to receive logistics updates and ask questions.
- Expansion of air freight parcel size and weight limits. Packages can now be up to 30 kilograms or 1-metre x 1.6 meters to help ship large items such as furniture.
- Daily air and sea freight connections. Shipping frequency will almost double to seven times weekly to maintain resilience and efficiency.
- Compensation for lost or damaged packages. Customers will be reimbursed up to RMB 2,000 (US$311).
Where is the Company Headed?
From June 1st to June 20th, the finale of Tmall, Cainiao will ensure that its customers feel confident in the company’s ability to deliver their packages. Despite global shipping delays due to COVID, the show will go on. Said Fan: ‘This series of customer-centric logistics upgrades reaffirms our goal of pursuing value-added services to enhance customers’ shopping experience while mitigating challenges posed by external factors’.
Furthermore, Cainiao has recently expanded its Southeast Asian operations, achieving revenue growth of 68% year-over-year. In Malaysia, the logistics operation has partnered with BEST Inc. and Yunda; in Singapore, the company has partnered with Roadbull, Park & Parcel, and the Singapore Post. And if its recent measures help retain and grow its customer base, the company will be well-poised to lead the industry in resilient and customer-centric global logistics. ‘COVID-19 made everyone realise how important the logistics infrastructure backbone is’, said Wan. ‘And it gave us a peek at what Cainiao should look like in three years’.