The Gig-Economy & Holiday Returns

December 31, 2020

Happy Holidays!  More than ever this holiday season, conversations on preparation and holiday shopping also include discussions of holiday shipping. The e-commerce wave of activity is washing over traditional carriers as they drown in packages. As e-commerce booms, the gig-economy has a role to play in outbound delivery that soon will extend into at-home and on-demand returns. 

Despite proclamations to “ship early”, holiday shopping on the “Cyber 5” days from Thanksgiving to Cyber Monday grew tremendously, and shopping continued at high levels through December. Digital Commerce 360 notes online shopping growth rates of 20.6%, reaching $34 billion in 2020. Volume continues at high rates.

TRADITIONAL HOLIDAY FULFILLMENT

Parcel carriers have responded as best they could. FedEx and UPS executed their plans, which were much discussed in the press and with their customers, to cap volumes by day for large retailers to keep service levels higher.  Unfortunately, this left large retailers such as Macy’s, L.L. Bean, and NewEgg backed up with more volume than they could ship. Many retailers pushed overflow volume to USPS, which has driven a repeat, and even a worsening, of service issues from the fall. According to ShipMatrix, USPS service levels for the week of December 6 dipped to 87%, as compared with 94% and 96% for FedEx and UPS, respectively. First Class Mail on-time service fell 20% lower than last year’s levels. With reports of delays a week or longer and low compliance with updating tracking records, consumers were increasingly nervous that Santa Claus might be late this year.

RETAIL & GIG-ECONOMY FULFILLMENT

Returns promise to continue pumping volume into overstretched networks even after the holidays.  Estimates from Narvar suggest that the volume of holiday returns may double as compared with last year! Even returns have time sensitivity, as returns inventory depreciates in value the longer it takes for them to be resold. Optoro estimates the value of fashion apparel depreciates by 20-50% over a 2-4 month period.

Service challenges are leading to increased focus on gig-economy companies for delivery.  In the past quarter, there have been a constant stream of announcements of new partnerships, including: 

  • DoorDash: Macy’s, Sam’s Club, & Walgreens 
  • Instacart: Dick’s & Best Buy 

Postmates, as they merge with Uber, has also launched a “Shop” function so local retailers can also offer on-demand delivery.

A recent study by ARC Advisory determined that 25% of the top 500 retailers will start using gig-economy companies for e-commerce delivery in the next 12 months.  The challenges parcel carriers are seeing this holiday will only strengthen the case for gig-economy fulfillment. 

Gig-economy providers offer consumers flexibility, convenience and speed, and the impacts of the pandemic only reinforce the importance for retailers to offer various fulfillment methods. Even as retail took tentative steps to reopen in the fall, consumers surveyed in Deloitte’s November 2020 State of the Consumer continued to express higher expectations to pay more for convenient services. This convenience has helped drive gig-economy provider growth in the pandemic for food and grocery delivery.

What’s new is the growing expectations around returns.  Return rates, whether online or in-store, vary significantly across retail categories. Per a study by Appriss Retail, returns of food are very small, while returns of convenience items at drugstores and pharmacies were as low as 2.1%. In contrast, return rates for sporting goods are 3x higher, returns at department stores are 6x higher, and returns for footwear are 8x higher! Gig-economy companies will find themselves pulled into the returns business as a result.

THE RE-TURNZ SERVICE

Going into peak returns season, it’s time to enlist the help of an on-demand reverse logistics company that specialize in returns. This is where Re-turnz First-Mile Logistics comes into play. Re-turnz offers a seamless and on-demand consumer experience by picking up consumer returns at their doorstep, while streamlining the returns process for retailers and shippers – delivering returns to the most effective first-level disposition location in their logistics network.

Re-turnz blends on-demand drivers with first-mile reverse shipping logistics. In addition to being a stand-alone B2C turnkey solution, Re-turnz First-Mile is integration-capable with retailer, parcel carrier, and 3PL/ROP online ordering platforms.

TECH INTEGRATION

The rapid growth of same-day and next-day deliveries must be met with equally consumer-centric and timely returns processing. E-commerce fulfillment does not stop at last mile delivery, which is why Re-turnz First-Mile Logistics is a differentiating service for any e-commerce platform.

Re-turnz is the first-to-market solution and currently operates in Austin, Dallas, Houston, and San Antonio, TX.  The Re-turnz business model can build scale by capturing density across retailer and carrier returns, with scalability goals for all major U.S. markets.

Leadership: Jose Tamez, CEO; T Brandon La Lanne, CTO; Jamie Myers, Director – Product Development 
Contact: Jose.tamez@Re-turnz.com ; Brandon.lalanne@Re-turnz.com ; Jamie.myers@Re-turnz.com
Videos: https://www.youtube.com/channel/UCJlolxIqfTMg00uYy76rd8w

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