Table of contents

5 mins

How outsourcing your logistics decreases your returns rate by 12%

Working with a 3PL partner that understands the needs of e-commerce brands can supercharge your growth and efficiency. Find out how.

a bar chart showing the rate of returns with and without outsourced logistics. The bar for with outsourced logistics is 12% lower.
Written by
Nicola Stebbing
Published on
November 3, 2023

Returns are a hassle for e-commerce brands, and it can be tricky to know whether or not your returns rate is industry standard.

That’s why Hive teamed up with Karmen and Alma, major players in the French e-commerce world, to analyze the performance of e-commerce brands in France. And while the data from this study was taken from French brands, it is relevant for e-commerce merchants across the globe.

This study was completed with the purpose to create the ultimate benchmark on e-commerce KPIs to help brands compare their performance to others, and gain valuable insights on their competitors and how to improve their own KPIs. 

For example, we checked out the average rate of returns per industry:

But in particular, we looked at the survey with a focus on logistics and found that brands who outsourced their logistics decreased their returns rate by 12%.

How did they do this? Let’s find out.

In this blog post we will cover:

  • Why focusing on your returns rate can save you time and money
  • Reducing your passive returns with automated address validation
  • How better fulfillment reduces your active returns
  • Taking preventative measures: error-free fulfillment
  • Use historical data to prevent future returns
  • Implementing a hands-off returns management strategy
  • Working with a 3PL like Hive
Blog component linking to the download page of the ultimate KPIs benchmark

Why focusing on your returns rate can save you time and money

In an ideal world, every order gets sent to a happy customer who keeps the products, and buys from you again.

But if only it were that simple. Regardless of how high-quality your products are, you will likely still need to deal with returns. This can be due to invalid addresses, errors in fulfillment, or simply a change of heart once the order has arrived.

Focusing on why orders have been returned and making sure you have a solid strategy in place for orders that come back to the fulfillment center is crucial, especially during high-volume periods such as Q4. 

If you can identify specific returns reasons, you can make changes to ensure you don’t lose out on revenue – or on valuable customer support time. 

Reducing your passive returns with automated address validation

A passive return is when an order comes back to the fulfillment center without having been delivered to the end customer. It means a loss of revenue for you, and possibly a frustrated customer who won’t order again.

This can be due to a number of factors such as incorrect home address, or that the order was not picked up from a packet station.

Automated address validation can help you minimize passive returns without losing any customer support time. Here is how:

When a customer inputs their address, a tool such as Hive’s address validation software checks the address against google maps to make sure it is findable. If there is an error or a field missing, the customer is alerted via email. The customer can then edit the address themselves without having to go via customer support.

It’s a quick way to ensure your customers feel in control of their orders, and that you don’t have to deal with the back and forth of passive returns.

How better fulfillment reduces your active returns

Active returns are when your customer has received the order but chosen to return it. This is more complex than passive returns as it could mean the order has been opened. Depending on your products, you will need a flexible 3PL partner and a returns strategy that works for you.

Taking preventative measures: error-free fulfillment

The best way to tackle returns is to be preventative. Working with a 3PL partner like Hive means there are multiple checks in place during picking and packing to ensure the right products are in the right package. 

This can be via scan points on picking boxes, barcodes on your SKUs, and checks at the packing station. 

All this ensures there is little room for human error, and that your customers get the order they wanted.

Use historical data to prevent future returns

When working with a 3PL partner you can get access to returns data that you can leverage to minimize future returns. 

For example, say you have been getting consistent data saying products are returned because of damage, you can look into your packaging to make sure it is protective enough. Consider new filling materials such as sizzle pack, or sturdier outer packaging. When you work with a 3PL partner like Hive, you can access a range of packing materials and expertise from an experienced team.

Or maybe your customers are returning because the item was not what they expected. Make sure your website listings are as explicit as possible with photos and videos of the intended use of the product. 

Once you have made these changes, monitor the data to see what’s worked and consider further solutions.

3 reasons why working with Hive can help you reduce your returns rate

If you are looking to reduce your returns, working with Hive for your fulfillment is a great first step. You can get access to a dashboard with all of your returns data, and a team of logistics specialists who can take care of your products in the fulfillment center.

1. Implement a hands-off returns management strategy with return rules

With the Hive App, you can set specific return rules depending on your SKUs. This means that the team in the fulfillment center knows what to do with each type of return without having to alert you. 

It also means you can customize your returns process on an SKU level. For example, you can set products that expire to have a shorter time frame for return, or specify that unopened products be immediately restocked.

2. Get accurate data

Not having to deal with the nitty-gritty of every return means that your time is freed up to focus on your data. And with Hive, you can access data on your return rate, return reason, and further operational metrics such as click-to-door speed and the performance of your delivery carriers.

You can use this data to stay in control of your fulfillment and delivery, and use it to implement strategies to reduce your returns.

3. Software built for e-commerce brands

At Hive we built our software based on feedback from e-commerce brands just like yours. That’s why we have features such as address validation to make sure you can reduce your passive returns. 

Plus we have a range of post-purchase features including automated emails to keep your customers updated on their order status, a returns portal for at-home label creation, and upsell opportunities.

So why wait? Reduce your returns rate by working with Hive today. Book a demo now and find out what Hive can do to empower your brand.