Rising Supply Chain Returns Prompt Online Retailers to Adopt Tech Solutions and Tailored Policies
E-commerce customer returns due to supply chain snafus have more than doubled since 2022, according to Altman Solon’s 2023 E-Commerce Store-to-Door survey. The survey underscores the importance of getting returns right by using new technologies and smart returns policies, especially with frequent online shoppers (“Super Shoppers”) saying they make purchasing decisions based on a company’s returns policy.
The survey shows that 25% of shoppers returned packages due to damage compared to 11% in 2022, while 17% of shoppers returned packages because the wrong product was delivered compared to 8% last year.
“While some returns are inevitable, retailers can make significant progress in reducing them by limiting unforced errors related to the supply chain,” said Altman Solon Partner Patrick Marshall. “This means investing in augmented reality and other visual packing aids to reduce mistakes, in addition to integrating robotics, optical image recognition matching/validating solutions, and other warehouse technologies to ensure package accuracy and fidelity.”
The survey also explores the specific return preferences of different types of consumers, including super, general, urban, rural, and suburban shoppers. Super shoppers are more than twice as likely (22%) to make a return at a locker than general shoppers (9%). Home pick-up returns have a low “most used” rate (6%) among general shoppers, but 19% of general shoppers prefer home pick-up, revealing opportunities for retailers that encourage this option. However, respondents identified printing return mailing labels as the second most common obstacle, so including pre-printed labels is critical to fostering home pick-up options.
“These days, retailers need to know not just what their customers want to buy, but also how they want to send it back,” said Altman Solon Director Derek Powell. “Like they do with consumer buying habits, online retailers need to use data analysis and AI to create returns policies that attract and retain more customers.”
The survey also identified ways for firms to reduce costs during the returns process through omni channel returns and inventory turnover, consolidating returns orders, and raising revenues through fees to offset expensive return options.
“Retailers don’t always seek out efficiencies in returns to the same degree they do when shipping their products out,” said Altman Solon Director Suhaib Rangoonwala. ““But there are significant opportunities for cost savings in processing returns and carrying inventory, as well as ways to increase turnover. The long-term goal is to nudge consumers to return options that are cheaper and more efficient, which will create a smoother process for retailers and customers alike.”
Other key survey results include:
- 25% of Super Shoppers return up to 25% of orders
- the frequency of general shoppers who return packages within a week has nearly tripled since 2022 (23% to 67%)
Altman Solon’s 2023 Store-to-Door Supply Chain Survey polled nearly 450 U.S. consumers to explore online purchasing habits across consumer segments. Other insights from the survey can be found here.
Altman Solon is the world’s largest strategy consulting firm focused exclusively on the Telecommunications, Media, and Technology (TMT) industries. We work with market leaders, challenger brands, and investors across TMT sectors. We support our corporate clients in identifying, developing, and implementing company strategies, new market entry approaches, digital innovation, and global M&A. We help our investor clients understand markets, conduct due diligence, and make high-stakes decisions with confidence.
Altman Solon has an extensive international reach with offices in Boston, London, Los Angeles, Mexico City, Milan, Munich, New York, Paris, San Francisco, Singapore, Sydney, Warsaw, and Zurich, with successful projects completed across the globe in more than 100 countries.