However, there’s a place that’s even more relaxed than the UK in terms of their returns policies and that’s the United States, where even Sephora and other cosmetics retailers accept returns for their merchandise (in the UK you cannot return cosmetics).

This freedom to return unused items has its good and bad parts.

The good: Why have a relaxed returns policy?

Customers know they can buy something in store and try it on at home. Just the thought of it is very comforting. It’s happened to me a few times in the past to buy something I then wanted to return, but showing up too late in order to get my money back. On other occasions the (Zara) manager was called and allowed me to return the product even after the 30-day period stated on the receipt.

By offering a 30-day money back guarantee you’re basically shouting out your confidence in your product’s quality. Banana Republic (in fact all the GAP Inc brands) has a 45 day You’ll be building trust in the brand, feel like you’re getting great service and often move on to choose more things to buy.

The bad: Wouldn’t it be easier to be more restrictive?

Some people will take advantage of the returns policy to fraud the business. Some of the more common return frauds from the Better Business Bureau of the Southwest:

“Renting” that involves the purchase and short terms use of a non-defective product with the intention of returning it later for a full refund. This is costly because once an item has been returned, it usually must be sold at a discounted price. I’d say this is probably the most common type of merchandise return fraud as the customer is damaging the product and  (shameless)

“Price manipulation” that involves switching the price tag, altering the price, or switching out one item for another before making a return.

“Altering receipts” or creating fabricated receipts – this is becoming easier to do because of the increased capability of technology.

“Check fraud” or the fraudulent use of gift cards to perpetrate return fraud.

How can you actually deal with merchandise return fraud? How can you prevent or minimize return fraud? Check the blog for an upcoming post next week.

USPS is offering the 2012 Mobile Commerce and Personalization Promotion to encourage commercial mailers to use mobile marketing tools — such as QR codes — on their mail.

During July and August, the Postal Service is offering an upfront 2 percent postage discount on Standard Mail and First-Class Mail letters, flats and cards (presort and automation) that include a two-dimensional barcode or print/mobile technology that can be read or scanned by a mobile device. When scanned, the technology must activate a link directly to either a mobile-optimized Web page that allows the mail recipient to purchase a product or service or to a mobile-optimized and customized Web page uniquely tailored to the mail recipient and accessible by a personalized URL.

"Mobile technologies continue to be one of the fastest-growing marketing sectors," said Gary Reblin, vice president, Domestic Products. "During the holidays, mobile purchases were up from 5.5 percent of ecommerce sales in 2010 to 11 percent in 2011.

"The integration of direct mail with mobile technologies will not only improve the long-term value of direct mail but also increase returns for merchants," added Reblin.

According to MarketingProfs, 2012, 48 percent of U.S. mobile subscribers own a smartphone, and one in five U.S. smartphone owners scanned a QR code with their phones, as of Dec. 2011. The Direct Marketing Association estimates that marketing mail returns $12.75 for every $1 spent.

"Personalization has always been an effective attribute of direct mail, and studies show that it improves return on investment," said Reblin. "Tying personalization with mobile technology is the next obvious step to enhancing the value of both mail and mobile marketing."

Commercial mailers may register for the 2012 Mobile Commerce and Personalization Promotion now through Aug. 30, 2012. For more information, visit usps.com/mobile-barcode.

The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

Know your customers: Practical ecommerce suggests a list of very useful questions to ask yourself:

- Why do customers buy from you and not a competitor?

- How often do they shop for the type of products or services you sell?

- Do they prefer to buy online or in a physical store?

- How price tolerant are they?

- Are they influenced by fashion, price, and free shipping?

- Do they shop using search engines, comparison-shopping sites, or because of social media referrals?

- Are your products “must have” or simply “nice to have”?

Get a good looking website. Whether you are just starting your business or if you notice sales reaching a plateau, it’s probably time to really think about the look of your virtual shop. The advantage for new businesses is that you don’t need to have been around for decades to be credible and have a good reputation (check out this really interesting study by Stanford University). It just needs to look really good, not overly complicated and with great quality images.

A few sites I like:

- Banana Republic

- Marks & Spencer

- Shopbop.com

- ASOS

Important! Make sure you have a call to action (buy now, view now, add to cart/bag), as well as essential information about the products (size in inches and cm, material, product care information etc). Also, have an FAQ page on your website: visitors will leave the page if they can’t find some quick answers to questions such as ‘how much will the postage cost?’ or ‘what’s the return & refund policy?’

Use social media to drive traffic to your website. This is a huge chapter to cover (especially if you’re new to the online sales world). Essentially what you need to to is 1) see where your audience spends time online and 2) be there to listen (primarily)and participate in their conversations.

If you’re primarily B2C then the main social networks you need to have a presence on are:

- Facebook

- YouTube

- Pinterest

- Twitter

- Google+ (getting there)

Social media gives companies a great opportunity to use gamification to drive sales (and loyalty, brand recognition, awareness etc.) so make the most of it. Offer exclusive rates or products to your followers on Facebook, create exclusive competitions on Twitter, get your product reviewed on YouTube and create boards on Pinterest using different inspiration sources (and your own products). These are just a few of the things you can do with social media (one of my biggest research areas).

In addition, you should at least bid for your own company name on Google AdWords and do some basic SEO for your website to help people to find you. For more information on online ROI and social media, read some of the related articles on the Home Delivery blog (below) or have a look at our other blog, The Followers.

By keeping these three things in mind you will have the basics covered to increase your sales online in a low-cost, highly responsive way. Keep me updated on how it’s worked for you.

Retail-integrated eCommerce empowers brands to use online sales to expand in-store sales. This is a significant benefit for branded manufacturers selling online, given that retail sales still represent, on average, over 90% of their total sales. This annual survey of retailers measures the effectiveness of retail-integrated eCommerce in helping both brands and their retail partners increase sales.

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Key findings include:

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- Retail-integrated eCommerce helps expand retail distribution. 61% of surveyed retailers place an opening order from a brand that launches Shopatron or monitor the brand to consider placing an order.

- Retailers are spending more with brands that send them orders. 67% of survey respondents have increased purchases with brands since those brands launched Shopatron. Over 55% of those retailers increase spend more than 10%.

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Since launching February 1, 2012 URGE(R) has partnered with over 75 Miami restaurants, allowing customers to order food for delivery through their iPhone, Android or the internet at www.UrgeSatisfyYours.com. The URGE app is a free download and is also free to use. URGE charges participating restaurants a commission for the orders it receives

The URGE app is so advanced that customers can have food delivered to their beach chair on the beautiful sands of South Beach using the "Order from the Beach (GPS)" function. Participating restaurants receive the food order along with the customers’ name, cell phone number and address. For beach deliveries where GPS is used the restaurant also receives a map that illustrates the location of the customer on the beach.

Restaurants already partnered with URGE include local favorites such as 8oz Burger, LA Cafe, Philippe Chow, I Love Pizza, Chowdown, The Original Brooklyn Water Bagel Co., Pizza Fusion and Big Pink.

While most URGE orders have been for delivery to an address (hotel rooms, condos, offices), consumers are becoming more comfortable using their phones for sophisticated transactions. As a result URGE anticipates a steady growth of "beach GPS orders". URGE is on track to have over 200 restaurant partners by the end of 2012 by further saturating South Beach, Downtown Miami and Brickell, while expanding to Coral Gables and North Miami.

After the rumours were confirmed, a large number of its employees went out on the streets to protest against this decision that implied dozens of thousands of people would lose their jobs.

The situation looked very grey from every angle analysts looked at it, but now the agency is changing its mind.

On May 9th, the U.S. Postal Service announced a new strategy that could keep the nation’s smallest Post Offices open for business, while providing a framework to achieve significant cost savings as part of the plan to return the organization to financial stability.

Postmaster General and CEO Patrick R. Donahoe shifted the focus from the impact on the workers to the impact it would have on the customers in rural areas: “Meeting the needs of postal customers is, and will always be, a top priority. We continue to balance that by better aligning service options with customer demand and reducing the cost to serve. With that said, we’ve listened to our customers in rural America and we’ve heard them loud and clear – they want to keep their Post Office open. We believe today’s announcement will serve our customers’ needs and allow us to achieve real savings to help the Postal Service return to long-term financial stability.”

Survey research conducted by the respected Opinion Research Corporation (ORC) in February, showed 54 percent of rural customers would prefer the new solution to maintain a local Post Office. Forty-six percent prefer one of the previously announced solutions (20% prefer Village Post Office, 15% prefer providing services at a nearby Post Office, 11% prefer expanded rural delivery). This strategy would enable a town to possibly have a Post Office with modified hours, as well as a Village Post Office.

A voluntary early retirement incentive for the nation’s more than 21,000 non-executive postmasters was also announced. Wednesday’s announcement delayed some of those plans. The agency still wants to end Saturday delivery, and it said it would announce the fate of hundreds of processing centers next week.

The list of Post Offices affected by the announcement and additional details are available here: http://about.usps.com/news/electronic-press-kits/our-future-network/welcome.htm

You could call inventory and warehouse space the twin evils of the supply chain. Both are big drags on the balance sheet. So it should come as no surprise that the two categories are lagging the recovery – or what’s passing for one.

There’s no question that companies have done a remarkable job of boosting the efficiency of their warehouses and distribution centers. The ratio of real inventory to sales has improved by at least a third over the past 60 years, according to Walt Rakowich, co-chief executive officer of Prologis. Given that he oversees one of the world’s largest owners and developers of industrial real estate, with an emphasis on logistics, he’s in a good position to know.

Rakowich was a speaker at the recent annual convention and expo of the International Warehouse Logistics Association in San Francisco. While the total amount of space continues to rise, he said, it’s not keeping pace with growth in real GDP. The first is expanding at around 1.8 percent a year, the second at around 2.6 percent. And the gap is widening.

Why isn’t supply meeting demand? Industry consolidation is one reason. For another, companies remain extremely gun-shy about committing to new, capital-intensive distribution space. Perhaps they’re still feeling the effects of the just-in-time craze. Spurred in part by the example of the Japanese, who borrowed the JIT concept from the U.S., supply-chain executives have been working for the past 30 years to replace inventory with agility. Practices such as vendor-managed inventory and kanban manufacturing have drastically shrunk the amount of raw materials, components and finished goods that need to be kept close at hand. Lower inventories, of course, mean less space needed to store them.

For consumer goods producers with ever-narrowing profit margins – and that’s just about everybody, unless your name is Apple – that’s a wholly positive trend. Until, of course, the real world intrudes. An earthquake and tsunami, port shutdown or just the everyday challenges that accompany longer supply lines can create the sudden need for buffer stock at the plant or close to end markets. A major manufacturer like Boeing begins to worry whether it can get enough parts from Japanese suppliers to build its much-delayed 787 Dreamliner. At times like that, inventory isn’t so evil after all.

Now throw in a budding economic recovery, and you have a situation where new thinking is required. Rakowich said businesses are indeed moving toward “cautious growth.” Nevertheless, inventory levels are hovering at 4 to 5 percent below where they ought to be. Time to take some of the cash that companies are hoarding, and sink it into new facilities.

Which isn’t to suggest that we need to return to the days of big, labor-intensive warehouses driven by legacy systems. Information technology has taken us too far for that to happen. Warehouse-management software has revolutionized the ways in which facilities utilize their workforces, pick and put away stock, and map the path of goods between the receiving dock and the racks.

Still, distribution operations are going to feel increasing pressure to boost storage space as supply and demand grow further out of balance. “The absorption of warehouse space – actual demand – is beginning to accelerate,” said Rakowich. Average utilization levels have risen from 82.5 percent to 84.5 percent in the past two years. Rakowich believes the trigger point for the acquisition of new space is between 87 percent and 89 percent. Prologis’s own facilities are already running at 92-percent to 93-percent occupied, surpassing 97 percent for operations with more than 250,000 square feet. “All the while, new supply of space is virtually non-existent.”

In fact, the demand for warehouse space never stopped rising during the recession, with the exception of 2009. For this year, Rakowich projects a need for between 175 million and 200 million square feet in the U.S. And that doesn’t even account for the loss of space due to obsolescence, which takes between 50 million and 75 million square feet off the market annually. In other words, developers must add that much just to stay constant – yet the last three years have barely hit the 50 million square-foot level. Compare that with 1993, the low point of the decade in terms of new space, when 75 million square feet was added.
Let’s be clear: businesses aren’t dawdling out of a sense of pessimism. On the contrary, said Rakowich, they are increasingly bullish about the economy, with investors continuing to drive up values and rents poised to grow as a result. Prologis’s Industrial Business Indicator index, based on regular customer surveys, has shown consistently positive sentiment since late 2009.

On the downside, there’s one abiding legacy of the Great Recession: the refusal of banks to lend money in meaningful amounts. Rakowich said that’s less of a problem today for big, well-capitalized businesses like Prologis. And we have seen some movement in the commercial lending sector over the past year or so. But smaller businesses, trying to finance speculative buildings even in a decent market, would have to put up equity of between 30 and 50 percent. Unfortunately, they’re not the ones with the huge cash reserves. “It’s very difficult for the moms and pops in business to get financing,” said Rakowich.

So the economic picture is brightening. Market occupancies are approaching 90 percent for the first time in five years. Conditions are clearly improving, and the fundamentals look good. But the warehouse market has yet to respond. As the saying goes, something’s gotta give.

My three choices of the week are:

Alibaba.com Should Change Model to Improve Profit:

Hurt by a shrinking pool of paying members, China’s biggest listed e-commerce company Alibaba.com posted a 25 percent drop in first quarter profit and one analyst tells CNBC the pressure on earnings could stay unless the company changes its business model.” How easy this would be to change only time will tell, but in the meanwhile

Tesco to Spend £150m on its Online Business:

Tesco has announced it will invest £150 million in its dotcom business, as it attempts to revive its flagging UK sales. Tesco’s full-year results, displayed a 0.9% fall in like-for-like UK sales. The supermarket now plans to make “significant improvements” to their website as part of a £1billion project to “raise the game” in the UK.

Philip Clark, Tesco’s chief executive, said: “Whilst our international business is delivering excellent growth, contributing £1.1 billion of profit to the group, we fully recognise that we need to raise our game in the UK.

“As a result, we are committing over £1 billion to make the UK shopping trip better for customers.”

Needle Raises $2.5M To Improve Service For Online Shoppers:

I love hearing about fairly small start-ups that become successful because their business models are interesting and do things differently. Needle founder and Chief Executive Morgan Lynch said he started the company to bring the same high-quality service that’s available in some physical stores to the Web.

He said he spotted that need after he shopped online for a wetsuit so he could try to beat his younger brother in a triathalon and instead had to buy the suit at a local store because he got tired of sorting through all the online reviews. (He also lost the triathalon to his brother).

This is what I call ‘timeless content’, hope you find it as useful as I do:

If you cannot view this video on the blog then click here to watch it on YouTube.

Supply chain and its recovery from the recession. Doesn’t it seem as though we are forever plunging into recession, then clawing our way back to recovery? In recent months we’ve seen hints that the U.S. economy is on the mend, with unemployment levels dropping. At the same time, consumer confidence is once again on the decline. It’s a mixed bag by anyone’s measure, but we’ve yet to return to pre-recession numbers in key sectors.

Now comes the International Monetary Fund to inform us that things are indeed getting better – slowly. The IMF’s latest World Economic Outlook projects 3.5-percent growth in global output this year, and 4.1 percent next year. For the U.S., the picture is somewhat less rosy – 2.1 percent this year and 2.4 percent the next, although both numbers would be well above the 2011 level of 1.7 percent.

There are, of course, some caveats. Europe represents a huge uncertainty. The Greek debt crisis has abated for now, but there are serious concerns about the size of Spain’s debt load, as well as those of Portugal and, to a lesser extent, Ireland. For this reason, the IMF expects real GDP in Europe to contract by .3 percent in 2012, and grow only by .9 percent in 2013. The continent’s overall results will be dragged down by a 2-percent plunge in GDP in Italy and Spain (that’s “negative growth” in economist-speak), and sluggish expansion in Germany and France.

The situation in China is especially interesting. By all accounts, that economic behemoth will continue to grow, but at a lesser rate of around 8.2 percent. (Which, of course, is still massive by any other economic power’s standards.) Growing domestic demand and the rise of a middle class with real purchasing power will help to keep China’s economy humming. On the other hand, China’s export prowess will be challenged by the steady appreciation of the yuan, which has risen in value against the dollar by some 8 percent over the last two years, and 30 percent in the last seven. Meanwhile, soaring labor rates are making Chinese manufacturing less competitive with other countries. And there remain nagging questions about the stability of China’s banking system, which reportedly is saddled with huge amounts of non-performing loans. Any combination of these factors could trigger a reversal of China’s economic miracle, with a severe impact on the entire world.

What does all this mean for the supply chain? In many ways, logistics serves as the bellwether of the global economy. You can get a pretty good sense of how the economy is faring by examining the health of carriers, warehouses and distribution service providers. So it was instructive to hear Benjamin Gordon, managing director of BG Strategic Advisors, LLC, a logistics investment bank, offer his outlook for the coming year. He spoke at the recent annual convention and expo of the International Warehouse Logistics Association in San Francisco.

BGSA hosts a supply chain conference each January. This year’s event, examining the current state of logistics, “saw growth across the board,” Gordon reported. Prices in the benchmark Cass Freight Index, which tracks North American freight volumes, were up 14 percent. Truckload rates alone were projected to rise 10 percent. While that’s hardly good news for shippers, it signals a somewhat healthier carrier sector.
Or so one hopes. Growth has also been accompanied by record levels of volatility, Gordon said. As of early spring, the Drewry Global Rate Index had plummeted by more than 20 percent since August 2011. (The more recent trend on the ocean side is up.) Fuel prices are doing their usual seesaw act, and are likely to climb higher in the months ahead, sparked by continuing political tensions in the Persian Gulf.

All of these factors are combining to give carriers of every mode a rough ride. “We expect to see some shipping bankruptcies in the next 12 to 24 months,” said Gordon.
And that’s just for starters. Gordon also sees an uptick in global mergers and acquisitions in the logistics sector. Recent examples include Norbert Dentressangle’s purchase of APC Beijing International, and UPS’s pursuit of TNT. Expect many more such global deals, Gordon said.

Expect also a blurring of the lines between providers of various kinds of supply-chain services. Waste processors, for instance, might venture into reverse logistics, which is also a prime target of niche vendors of warehousing and other aspects of logistics. Convergence will be the industry’s key word in the months ahead.
There is also a resurgence of activity on the financial side, as hedge funds and other deep-pocketed investors turn their attention to the logistics arena. Last year, investor Bradley S. Jacobs of Jacobs Private Equity LLC sank $150m into Express-1 Expedited Solutions Inc., a handler of time-sensitive and emergency shipments. “He’s using it as a platform to turn it into a much bigger business,” said Gordon. “The logistics business is his next target.”

Jacobs had done his homework. A survey of 200 companies, taken by BGSA at its supply-chain conference, found more than half reporting growth of better than 10 percent in the prior year. Virtually every one had experienced some degree of expansion, Gordon said. The industry looks to be an attractive target for outside investment.

For logistics providers, challenges abound: rate pressures, increased competition, regulatory changes, rising costs, access to capital and a dearth of qualified talent among them. In fact, it’s tempting to use the logistics industry as a scale-model of the global economy. Both are on the rise, yet facing big obstacles on the road to recovery. They’ll get there eventually – an inch at a time.

The area is inbound shipping costs.

With the typical focus on the delivery costs to get orders to your consumers, an area that often gets over looked is the cost to get product from supplier partners to your fulfillment center. Unless you are your own manufacturer, you will have some amount of inbound shipping costs, but this is an area that a lot of small and medium size online retailers struggle to manage effectively for several reasons.

"Inbound" shipping is a very different animal than “Outbound” direct to consumer, small parcel shipping that online retailers are used to dealing with. The options and costs for handling a 2 lb. shipment going to a residential address are much different than a 200, or even a 20,000 lb. shipment going B2B. You might be an expert at comparing transit times and rate discounts with UPS, FedEx, DHL, and the postal service, but inbound movement of these larger “freight” size shipments plays by different rules and the considerations are not the same. 

Many suppliers will include shipping costs in the cost of goods you are buying to sell on your site. This makes understanding what the actually shipping costs are difficult at best. Chances are supply chain management is not a core competency for most ecommerce companies, and that is okay. Most online retailers are geared up to optimize their website and internet marketing to drive sales – not understand and negotiate the best freight shipping rates.

What to do? Partner with experts and be diligent when comparing rates. Freight brokers and 3PL‘s (Third Party Logistics Providers) have the experience and more importantly relationships with large portfolios of shipping companies. They can search for the best rates for your freight shipment, no matter what the size is, or where it is going.  These resources also bring buying power and lower negotiated rates than a business moving only a small number of freight shipments. This will not only help reduce costs, but will likely also help reduce many of the administrative headaches of freight shipping having to do with paperwork and appointments.

When you have identified 2 or 3 third party providers you like, make sure to continually compare rates between them. You will often see a difference of up to 100% on rates for the same shipment depending on the provider you choose. Different providers will also likely be able to offer better rates in certain areas, so it is important to shop around.

Kenneth Kowal writes about Ecommerce Fulfillment and Logistics on his Easy Logistics Management Blog. You can connect with him on LinkedIn and on Twitter @kennethkowal.

In today’s world, communication between consumers is faster than ever before. As more and more information is distributed through the internet and other channels, it is inevitable that buyers in the modern era are more informed, and thus more demanding, than in the past. People today don’t just want a certain level of service: they expect it.

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How Do Fulfillment Providers Save On Shipping?

Why is Accuracy Important?

How Do Fulfillment Providers Ensure High Levels of Accuracy?

The Advantages of Having Dedicated Customer Service

Alternatives to Outsourcing Your Order Fulfillment

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