Analysis

Reverse logistics – the Norwegian experience

Sunday 17 May is Norway’s national day of celebration, Constitution Day, making this the perfect time for us to take a look at reverse logistics from the Norwegian perspective. Flexible and easy ways for your customers to return unwanted goods can be your next driver for reduced cost and increased sales, writes Jacob Falck from Bring/PostNord in Norway.

Jacob Falck

Customers appreciate a simple and well-functioning return process. Research done by Ipsos MMI showed that 1-in-3 consumers wanted a better returns policy if they were to shop more frequently. The highest rate of returns is among young people within the clothes & fashion and electronics categories. The Norwegian trade magazine Moderne Transport reported that ELLOS has a return rate of 20%, Zalando as high as 50% on at least one item of a shipment. Torshov Sport with a 25% e-tail share reports a low share of returns.

norway chart 1

The Ecommerce Report of 2014 from Bring/Norway Post reports the most frequent reason for returns to be that the ordered items did not fit or were the wrong size. There are a lot of challenges with goods that have been used. What about those consumers who abuse your trust and effectively rent (for free) something nice for their Saturday party – something that then can’t be resold?

Reasons for returns in Norway:

  • Wrong fit /size (56%)
  • Damaged or missing goods (25%)
  • Did not meet expectations (14%)
  • Wrong item (6%)
  • Change of mind (12%)

There are several ways to reduce returns but the problem will always be there. While it’s something the UK industry is more familiar with, here in Norway, we’re seeing the emergence of a new trend within a number of sectors, such as clothes, textiles, and interiors. An increasing number of consumers prefer to use their home to try things out before the final buying decision is taken.

A friendly offensive strategy for reverse logistics should be chosen out of the following criteria:

  • What shoppers want:
    • Easy delivery & return options
      • At your premises as own stores, warehouse or offices
      • At the customers’ homes
      • Mail box
      • At the pick-up point of the delivery
    • Free return
    • Ready-made returns package, prepaid labels and necessary documents (for customs, where required)
    • Fast refund processes
  • What e-tailers want:
    • Well-functioning procedures for returns when the e-tailer wants the consumers to use their home as fitting rooms
    • Return of colour & fabric samples before final buying decision
    • Product safety recall of products
    • Quality & value assessment of the returned items
    • Procedures for returning goods to be repaired or for examination (if claimed to be faulty)
    • Re-use or recycling
    • Cause of return info-bank (understanding the reason for return; using the right of withdrawal, wrong item, wrong fit, damaged, etc)
    • Feedback for quick reselling of the item
    • Implement a simple and affordable customer-friendly returns process
    • Different procedures for ‘good’ and ‘bad’ customers to increase long term profit
    • Where to ship the returns:
      • Separate place for repacking for sale/inspecting the goods
      • Direct to another customer ordering the same item
      • Warehouse within the country – terminal for customs clearance – international central warehouse

The Danish E-commerce Association (FDIH) presented research showing different ethics and attitude among various age groups that really shocked me. One-in-four shoppers aged 15-30 thought it was OK to return a used item, and 1-in-6 have done so. Where so-called renting is concerned, 23% find it acceptable to buy a dress on Friday and hand in it again after the weekend’s parties – as long as it doesn’t have any damage, of course. You can read it in full here, if your Danish is ok, that is.

One of the recommendations of the E-Trade report 2014 from Bring/Norway Post was to develop and implement a process specifically for those customers misusing the system. However, don’t get the balance wrong here – it’s important not to let customers abuse your trust, of course. But you shouldn’t suspect everyone. Be positive in your outlook, and look after your customers.

Introducing free returns is likely to increase the number of shoppers who want to try to abuse the system, but several online store owners here in Norway have told me that their best customers are the ones that complain. The worst one is the customer who never comes back anyway.

Your focus should be on increasing revenue through increasing sales and reducing cost in your value chain. Be aware of misusers but enjoy your hard work, doing everything you can to increase the value for your customers. The pleasure and success caused by increased customer loyalty can’t be overvalued.