How to Reduce Stranded Inventory? [2023]

A Paradigm Shift? From Free Returns to a Fee for Returns

In recent years, there has been a noticeable shift among eCommerce brands towards charging a fee for returns. While many companies still offer free returns, an increasing number of brands are implementing policies that require customers to pay a fee when returning items. This change has been driven by a variety of factors, including rising costs associated with processing returns, the need to deter fraudulent or excessive returns, and the desire to offset the cost of offering free shipping to customers. This shift has been observed across a range of eCommerce sectors, including fashion, electronics, and home goods, and is likely to continue as brands seek to optimize their profitability and balance the needs of their customers. “In India, about 25%–40% of clothes sold online are returned where a seller pays for forward & reverse logistics with no revenue capture.”-Harsh Vaidya, CEO, WareIQlink Why do Brands Want to Charge for Returns? E-commerce brands may charge for returns for a variety of reasons, including: To cover the cost of processing and handling returns: Returns require additional labor and resources to process, such as restocking, repackaging, and shipping the item back to the warehouse. E-commerce brands may charge a fee to cover these costs. To deter excessive returns: Some customers may abuse the returns process by ordering items with no intention of keeping them, and then returning them after use or damage. Charging for returns can deter this behavior by making customers think twice before making a return. To offset the cost of free shipping: Many e-commerce brands offer free shipping to customers, but this can be costly for the company. By charging for returns, the brand can offset some of the cost of providing free shipping. To incentivize customers to keep their purchases: By charging for returns, e-commerce brands can incentivize customers to carefully consider their purchases before buying. This can lead to fewer returns and a more profitable business. Paradigm Shift Ripples From West to East Many eCommerce fashion and lifestyle brands have varying policies when it comes to returns and fees. Some of these brands may charge for returns, while others offer free returns. Here are some examples of eCommerce brands that may charge for returns. In the United States and Canada, brands such as ASOS, Zara, H&M, Boohoo, TopShop etc. are charging a small fee for returns. The fee varies depending on the location and the type of item being returned. Some Indian eCommerce marketplaces, particularly those that sell high-value items like electronics and appliances, such as Flipkart, Croma etc. have been charging a fee for returns for quite a while now. These fees typically cover the cost of processing and restocking returned items, as well as any associated shipping costs. However, in recent years, many Indian fashion and lifestyle eCommerce brands have moved towards offering free returns as a way to attract and retain customers. This trend has been driven by intense competition in the eCommerce market, as well as rising customer expectations for convenience and flexibility. Recently a news article from The Rest of the World publication revealed how Myntra, the leading fashion and lifestyle marketplace in India, has devised a system to identify and assign scores to customers basis the frequency of their returns. If the score of a customer crosses a specific threshold, a fee will be applied to items they then wish to return. That said, some Indian eCommerce brands may still charge a fee for returns in certain circumstances, such as for items that are heavily discounted or for international orders. Ultimately, the decision to charge for returns will depend on a range of factors, including the company's business model, industry dynamics, and customer preferences. As eCommerce continues to grow and evolve in India, it is likely that the policies around returns and fees will continue to evolve as well. Bracketing: The Main Cause Behind the Rise of Return Fee For years now, customers have been known to employ the tactic of bracketing their online purchases. Bracketing in online purchase refers to a practice where a customer purchases multiple variations or options of a product with the intention of returning some or all of them. For example, a customer might buy a shirt in three different sizes, with the intention of returning the two that do not fit properly. The practice of bracketing is often used by customers as a way to mitigate the uncertainty associated with online shopping, particularly when it comes to sizing and fit. By ordering multiple options, customers can try on the items in the comfort of their own homes and return those that do not fit or meet their expectations. While bracketing can be a useful strategy for customers, it can also pose challenges for eCommerce brands. When customers order multiple variations of a product with the intention of returning some or all of them, it can create additional costs and complexity for the brand in terms of processing returns and managing inventory. As a result, some eCommerce brands have implemented policies to discourage bracketing, such as charging a fee for returns or limiting the number of items that can be purchased in a single order. “Major international corporations such as Zara, H&M, and Uniqlo have begun to implement fees for returns in specific nations to combat the practice of "bracketing," where customers order multiple variations of size, color, or design without intending to keep all the items.”-Harsh Vaidya, CEO, WareIQlink Is Charging a Return Fee Fair? The question of whether charging a return fee for online orders is fair is a complex one and depends on various factors, including the reason for the return, the cost of processing the return, and the overall value proposition offered by the eCommerce brand. On one hand, it can be argued that charging a return fee is fair because it allows eCommerce brands to recover some of the costs associated with processing returns, such as shipping, restocking, and quality control. If a customer is returning an item simply because they changed their mind or made an incorrect purchase, it could be argued that it is reasonable for them to cover some of these costs. On the other hand, it can also be argued that charging a return fee can discourage customers from making purchases in the first place or returning items that they are genuinely dissatisfied with. This can ultimately hurt the customer experience and damage the reputation of the eCommerce brand. “Any time you take away something from consumers or make them pay for something that used to be free, you’re gonna get some outcry over it.”Sky Canaves, senior analyst of retail and e-commerce at Insider Intelligencelink The Future of Paid Returns On one hand, there are indications that eCommerce brands may continue to move away from charging fees for returns in order to remain competitive and meet customer expectations. As online shopping continues to grow in popularity, customers are becoming more accustomed to the convenience and flexibility of free returns and may be less willing to shop with brands that charge fees. At the same time, there are also factors that could lead eCommerce brands to continue or even increase their use of return fees. For example, rising costs associated with processing returns, particularly for large or heavy items, could make it more difficult for eCommerce brands to offer free returns on all products. In addition, the increasing prevalence of bracketing, where customers order multiple variations of a product with the intention of returning some or all of them, could create additional costs for eCommerce brands and incentivize them to implement fees to discourage the practice. Ultimately, the future of charging fees for returns in eCommerce is likely to be shaped by a complex interplay of factors and will depend on the strategies and priorities of individual brands and retailers. “From my perspective, the flat fee for returns is unjust to those customers who experience actual problems, such as incorrect size, subpar fabric quality, etc. Charging a returns fee to this base could have a negative impact on their eCommerce behavior.”-Harsh Vaidya, CEO, WareIQlink

March 05, 2023

Packaging Customization and Personalization: A Lesser-known Tactic to Boost Customer Delight in eCommerce

Packaging customization personalization in eCommerce logistics can help delight customers and create a positive brand experience. An example of a popular real Indian D2C apparel eCommerce brand that has used packaging personalization and customization to their advantage is Chumbak. Chumbak is an Indian D2C brand that specializes in creating trendy and colorful apparel and accessories. Chumbak uses packaging personalization and customization to their advantage by: Using visually appealing and high-quality packaging that enhances the unboxing experienceIncorporating their brand's unique and colorful design elements into the packaging, making it instantly recognizable and memorable for customers.Offering a customization service where customers can have their own name or message printed on the packagingIncorporating eco-friendly materials for packaging and ensuring their packaging is sustainable and responsible This approach has helped Chumbak to create a unique and memorable customer experience, which has helped to increase customer satisfaction and loyalty. What Kind of Personalization and Customization Options are Available Usually? Here are a few ways to personalize and customize packaging for ecommerce logistics: Custom branding: Add your company's logo or branding elements to the packaging to make it easily recognizable. This can include custom printed boxes, bags or mailing envelopes. Personalized messaging: Include a personalized message or thank you note inside the package to make the customer feel valued. This can be done via a printed card or a handwritten note. Custom packaging inserts: Use custom packaging inserts to create a unique unboxing experience. This can include tissue paper, confetti, or other items that add a touch of elegance to the packaging. Product-specific packaging: Create packaging that is specific to the product being shipped. For example, if the product is a fragile item, use packaging that is specifically designed to protect it during transit. Eco-friendly packaging: Use eco-friendly packaging materials such as biodegradable or recycled materials to appeal to customers who are environmentally conscious. Gift wrapping: Offer gift wrapping as an option for customers who are buying the products as a gift. This can include custom gift wrapping paper or a gift box. By personalizing and customizing packaging, you can create a memorable brand experience for customers and increase the chances of repeat business. It's also important to consider the cost and feasibility of the customization before implementation. Impact of Customization and Packaging Personalizing and customizing packaging in eCommerce logistics can have several positive impacts on your business, including: Brand awareness: Personalizing and customizing packaging with your company's branding can increase brand awareness and make your company more easily recognizable. Customer loyalty: Personalized messaging and unique packaging can make customers feel valued and appreciated, which can increase customer loyalty and repeat business. Unboxing experience: Customizing packaging can create a unique and memorable unboxing experience for customers, which can increase customer satisfaction and positive word-of-mouth marketing. Increased perceived value: Personalized and custom packaging can make the customer feel like they are receiving a premium product, which can increase the perceived value of the product. Environmental consciousness: Eco-friendly packaging options can appeal to customers who are environmentally conscious, which can have a positive impact on the company's reputation and social responsibility. Gift giving: Personalized and custom packaging can make it easy for customers to send the package as a gift which is a great way to reach new customers and increase sales. Overall, personalizing and customizing packaging in eCommerce logistics can help create a positive brand experience for customers, increase customer satisfaction, and ultimately drive sales and revenue for the business. Customization and personalization also impact key business metrics positively. An example of how delighting customers with custom and personalized packaging can help improve eCommerce business growth is as follows: Increased customer loyalty: By providing personalized and custom packaging, eCommerce companies can create a positive and memorable experience for customers, which can lead to increased customer loyalty and repeat business. Positive word-of-mouth: Customers who have a positive experience with a company's packaging are more likely to share their experience with friends and family, which can lead to increased brand awareness and new customers. Enhanced brand reputation: By providing high-quality and personalized packaging, eCommerce companies can enhance their brand reputation, which can lead to increased customer trust and loyalty. Increased revenue: By creating a positive and memorable customer experience through personalized and custom packaging, eCommerce companies can increase customer satisfaction, which can lead to increased revenue through repeat business and new customers. Cost savings: By reducing packaging costs and providing eco-friendly packaging solutions, eCommerce companies can save money and appeal to environmentally conscious customers. Overall, delighting customers with custom and personalized packaging can help eCommerce businesses to improve customer loyalty, increase brand awareness and reputation, and grow revenue. Importance of Order Personalization and Customization in 2023 Order personalization and customization is important in 2023 for eCommerce brands because it helps to create a unique and memorable customer experience. With the rise of eCommerce competition, customers are increasingly looking for more personalized and tailored shopping experiences. By offering personalization and customization options, eCommerce brands can differentiate themselves from their competitors and build stronger relationships with their customers. Additionally, order personalization and customization can help to increase customer satisfaction and loyalty. When customers receive a product that is customized to their preferences, they are more likely to feel satisfied with their purchase and may be more likely to return to the brand in the future. Order personalization and customization can also help to drive sales and revenue growth. By offering personalized and customized products, eCommerce brands can increase the perceived value of their products, which can lead to higher prices and increased sales. How can WareIQ Help? WareIQ's full-stack fulfillment solution has enabled multiple leading brands across categories such as Blissclub, Setu Nutrition etc. create a delightful experience for their customers by utilizing custom packaging material, thank you notes, combo creation etc. This helps brands deliver a premium customer experience and makes the moment of truth - the unboxing experience- unforgettable for clients. In case a brand has a particular requirement for packaging material, we can be flexible about it and help brands fulfill the orders in the way they feel is the best for their customers. With our capable fulfillment operations team, brands can rest assured that their orders are being picked, packed, and shipped in an accurate fashion, without any delays or damages, leading to on-time deliveries which facilitate positive customer sentiment about the brand experience. To know more about our personalization and customization services, visit: WareIQ Order Customization and Personalization

February 25, 2023

Stranded Inventory: Impact, Causes & Solution

What is Stranded Inventory?

Examples of Stranded Inventory

Why Does Inventory Get Stranded?

How Can You Reduce Stranded Inventory (using AI)?

Aman Sandilya

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Packaging Customization and Personalization: A Lesser-known Tactic to Boost Customer Delight in eCommerce