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Making a return on investment

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The convenience of online shopping has re-energized the retail market, but sellers need to plan for a much higher merchandise return rate as part of their changing business models.

According to the National Retail Federation, consumers return at least 30 percent of all items purchased online — more than three times the rate for purchases made at traditional brick-and-mortar stores.

Order fulfillment has become as much about handling returns as it is about processing purchases and shipping.

Shoppers expect the ease of online shopping to translate to returns. In fact, 79 percent of shoppers want free return shipping, and nearly 49 percent of retailers have adjusted their return policies to accommodate consumer demands.

The influx of subscription box retail services, which offer curated, themed merchandise to consumers through regular shipments, is adding new challenges to an already difficult-to-manage process. According to Forbes, the subscription market grew 890 percent in the last three years, and there are 18.5 million subscription box shoppers in the United States alone.

Many subscription models, especially apparel services, include returns as a central part of the customer experience. Each subscriber receives a box of merchandise, often custom-selected by a stylist, with the option to purchase preferred pieces and return the rest. The retailer makes the return process as easy as possible for the customer, but the influx of returned merchandise can be daunting for many warehouses to receive and put back into inventory.

Boxzooka, an eCommerce order fulfillment center in northern New Jersey, has streamlined the processing of returns with its proprietary warehouse management system, designed specifically to meet the high demand of subscription boxes and other online retailers.

“We saw processing returns as a huge opportunity to improve upon because most 3PL order fulfillment centers fall short in servicing to their clients,” said Brendan Heegan, Boxzooka CEO. “While most 3PLs leverage the fact that returns are an ‘ugly’ part of the business and will look at returns as an exception process, we took the time to build features in our WMS that allow us to process them efficiently and provide a best-in-class service level for returns processing time.”

Helena Cawley, CEO and founder of Sweatstyle, connected with Boxzooka in 2016 to help her online fitness apparel subscription service meet the growing demands of health-conscious women consumers. Boxzooka collaborated with the company to customize its order fulfillment system to reflect the emerging business model of subscription-box returns.

“Having returns for 90 percent of the boxes shipped out was definitely a ‘let’s-figure-this-out’ moment,” said Cawley, who founded SweatStyle in 2015.”We worked together, and they were always willing to help us determine how to make it better.”

Because SweatStyle offers a wide variety of stylish workout and leisure wear from multiple manufacturers, inventory management, with a focus on customer service, is a critical aspect of its “try before you buy” model.

“We have a five-day return window, and we have an automated system in place that gives people updated reminders about timing, so customers can stay on top of it,” Cawley said.

Boxzooka’s WMS was optimized for processing returns timely and efficiently by being able to pull an original order by a variety of data-driven attributes. Using thumbnail images to match items where product tags have been removed, integrated retagging and barcoding mechanisms and printing of location labels on the fly allow Boxzooka to get products matched, quality-assured and back to stock in minutes instead of accumulating on the loading dock for days.

“Time is of the essence to credit customers before they start to wonder when the refund will appear on their statement,” said Heegan who plays a critical role in designing ongoing specifications for the Boxzooka WMS based on the needs of evolving retailers. “In the case of SweatStyle and other curated subscription boxes, sometimes the retailer doesn’t even recognize their revenue until the return is processed and they know what the consumer is keeping. So, it’s important for everyone in the transaction that the loop gets closed out swiftly.”

SweatStyle uses Shopify for its inventory management, and Cawley is pleased with how the software synchs with the Boxzooka warehouse management system.

“It’s easy to have a snapshot of what we have in the warehouse, and it’s very immediate — within an hour or so,” she said.

As SweatStyle continues to grow, Cawley works closely with the Boxzooka team to ensure the retailer’s order fulfillment evolves to keep up with consumer expectations.

“We have grown together over the last years, and they have helped us streamline our business and deliver the level of customer satisfaction that we demand of ourselves,” she said. “All of our needs have always been met with enthusiasm and a great work ethic.”

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