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Retail Business Review | Wednesday, January 18, 2023
Retailers can avoid passing on transportation expenses to customers by having products delivered directly from the source, especially for oversized, heavier items.
FREMONT, CA: In an industry with razor-thin profit margins, even a fraction of a penny on each order sent can make a significant impact, and the cost of returns can also eat into revenues. E-commerce businesses maximize these expenses and earnings by refining their logistics. With more substantial investment, AI technology may allow shoppers to visualize a fashion item on their body, reducing return rates. Understanding client return reasons can help retailers reduce them. Reviewing products might reduce returns as customers return to purchase with retailers, so they can give more personalization options—such as through mobile apps—to make better sizes, related products, and other recommendations. It seems improbable that a one-size-fits-all solution will emerge that resolves all shipping and returns issues in every circumstance.
Reverse logistics: Retailers incur costs beyond order fulfillment, and return costs can hurt businesses of all sizes. Retail logistics companies are following the lead in other nations, so it'll be interesting to watch how shoppers react. Customers who don't subscribe to their Premier service have to pay for returns, so they're more likely to subscribe and become repeat buyers. Like delivery costs, companies may profit from exploring returns options. To avoid consumer isolation, some organizations may cover return costs. Due to their nature, fashion and footwear products have significant return rates, so transferring those expenses back to customers may lower the number of returns. In fashion, this can be as basic as noting if products run true to size, small or large.
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Cost-free shipping: Customers consider free shipping a better offer because they don't have to calculate shipping expenses. Free shipping makes buyers more likely to buy. Frequent customers, that yearly charge with all the bonuses makes shipping feel free, and they know they can get almost everything they need the following day without additional shipping costs. Various stores have capitalized on the Prime subscription model by offering free next-day shipping for a small annual charge. The fee is so low that it doesn't pay to ship, but clients are more loyal. As they paid for delivery, they're more inclined to shop at the merchant again since shipping is "free" and purchases cover shipping.
Supplier-direct shipping: Retailers must consider the capital, storage, shipping, and customer demand when increasing inventory and orders. Dropshipping reduces these concerns for retailers because the supplier handles them. Retailers can avoid passing on transportation expenses to customers by having products delivered directly from the source, especially for oversized, heavier items or international sales. High-volume suppliers have shipping arrangements, so they may include delivery in the price, making it easier for retailers to determine if the product has a good margin. Depending on a single shipping source is only sometimes the best approach to cut logistics expenses, but it can be helpful.
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