Operations
04 January 2023
New ecommerce return options: Pickup, box-free, store drop-off
New options balance customer experience, operational imperatives and environmental concerns.
(Photo courtesy of FedEx)
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With the holidays moving to the rearview and a new year upon us, returns season is in full swing. As the refunds and exchanges come in, the companies that power ecommerce are rolling out new ways for customers to more easily send items back.
Returns have grown right alongside ecommerce over the last several years. While the National Retail Federation projected a decrease in the online return rate for 2022 from 20.6% to 16.5%, there are signs that the 2022 holiday shopping season is bringing an influx. Salesforce predicted a returns “tsunami” for the season, while Loop saw DTC brands using its platform saw records.
Returns are a tricky area for brands. On the one hand, offering flexible policies like free returns and home try-on allows brands to offer a great experience. But returns also present logistics challenges and can eat into profitability. Hanging over all of it is the environmental consideration of using less packaging, reducing waste and lowering transportation mileage.
With innovation, the goal is to strike a balance between these interests. Below are three examples of how ecommerce platforms and logistics companies are creating new ways to make returns, and what they mean for consumer, business and climate imperatives.
DoorDash: Package Pickup
The details: On Wednesday, on-demand delivery marketplace DoorDash debuted its hack for returns: A driver will bring a prepaid package to a local UPS, FedEx or USPS location. Called Package Pickup, the feature is accessible on the DoorDash homepage, and the service will deliver up to five packages per $5 order.
What it addresses: For consumers, this is all about convenience. They already didn’t have to leave home to shop for an item, and now they don’t have to leave home to make a return. On the logistics side of the equation, it positions DoorDash at a point between carriers and consumers. Undoubtedly, the service is helping DoorDash unlock new ways to use its platform. But it also could help to solve problems for carriers and logistics operations that are facing heavy volumes of returns.
FedEx: No-box, no-label
The details: Starting this year, FedEx will allow consumers to drop off items at one of 2,000 FedEx Office locations without a box or label. Returns will be processed using a QR code. Called FedEx Consolidated Returns, the option will be available through participating merchants. FedEx will consolidate the items with returned products from others, then routed to send back to merchants.
What it addresses: For consumers, this removes two steps from the returns process: packing a box and printing label. In the case of finding a box, it also removes what is usually a hassle. For brands and retailers, FedEx touts that it is a low-cost returns service that provides a way to offer a good experience to merchants. By putting returns together and optimizing transportation, it could also use less energy than a single-package return.
Amazon: Box-free returns at stores
The details: As the market share leader in ecommerce, Amazon has also made logistics a key part of its operations. It has continuously innovated to balance customer experience, and solve its own challenges in the movement and delivery of goods. In a recent post, the company shared its own existing box-free return program that is activating its network of stores, and partnering with others. This service allows consumers to get a QR code through the Return Center on its site. Then, they can drop off an item at Amazon physical stores, Whole Foods, Kohl’s or UPS Store locations. Some Staples locations were also added as a drop-off point over the holidays.
What it addresses: Amazon was one of the earliest companies to offer free returns, and box-free returns only adds to the ease of that process. It’s worth noting that there are actually two returns innovations here: box-free returns and expanded drop-off points to stores outside of Amazon's network through partnerships. Customers benefit from both in the form of easier returns. Meanwhile, stores get a visit from shoppers who may be apt to buy something else as they make a drop. This means retailers may have opportunities to merchandise around the dropoff points. Call it buy online, drop off in store.
The bottom line
Innovation will keep pushing consumer expectations forward. Free returns were already becoming table stakes. The latest developments indicate that a wider number of options to get items back to retailers – particularly box-free returns – could follow.
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Marketing
09 June 2023
'There's a lot of ways to frame value'
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
Photo by Kelly Common on Unsplash
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.
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