Executive summary
The on-demand shopping model is changing customer purchase behavior rapidly. Customers expect a quicker turnaround and a more streamlined response when it comes to all aspects of their interaction with the business — including returns.
By re-thinking and then re-designing their returns process to better reflect this on-demand shopping reality, Terry Bicycles encouraged future purchases, improved the customer experience — and were themselves pleasantly surprised to gain some insight into customer behavior when it comes to returns.
- Not only were their assumptions skewered, this process re-design demanded that they improve and streamline several other related aspects of the order fulfillment journey.
- On the customer-facing side, this translated to a smooth, simple, and stress-free buying and returns experience.
- For Terry Bicycles, the team quickly realized how pivotal a role “convenience” plays in the buyer’s journey.
Notice how the post-purchase experience triggers a “loyalty loop” that then positively feeds into the “moment of purchase.”
Source: McKinsey
The Terry Bicycles Story
Terry Bicycles, an apparel and bike parts distributor in Vermont, is headed up by CEO Liz Roberts. Their customers order online shortly before a cycling event or prior to going on a group ride for the weekend. Mondays and Tuesdays are the busiest times for both purchases and returns.
Besides technical athletic wear, this retailer is obviously a seasonal business so they have a short window in which to sell returned products again at full-price and in the same season. This USPS interview showcases the challenges, innovative solutions, and the business context or shopping environment that most retailers today must operate in and respond to.
Challenges and Objectives
In order to keep their customers satisfied, the team at Terry Bicycles needed to re-think the way customers buy and gain insight into when and why they were buying. The team also needed to know what their customers’ major pain points or deterrents in the buying process were. It was only with this knowledge that they could begin to implement solutions.
As with many other companies, Terry Bicycles was facing two major changes: The on-demand shopping model and the need to keep their operations flexible but productive and engaged, both in the context of returns.
The on-demand shopping model impacts the flow of order fulfillment and, to keep up with the pace, the internal operations team needs to respond just as quickly. When customers order apparel online, there are always issues with sizing and fit — especially when they aren’t used to size charts.
These products are fashion-oriented: What is available in one season cannot be resold in the next. So, as a manufacturer, Terry Bicycles needs to ensure that what gets returned is still sellable. This means receiving returns within the season. Which means incentivizing and encouraging the customer to return these products in a timely manner.
Meanwhile, on the business side, there was a need to cross-train individuals in the warehouse because of the fluctuating nature of orders and returns.
“We do a lot to cross-train our workforce in the warehouse, so if the phone’s not ringing, we can have people in the calling center help with certain aspects of returns. Vice versa, there are certain people who are involved in pick, pack and ship who can be involved in the returns process — specifically the opportunity to put the product back into inventory.”
Responsiveness, however, can be sliced in more than one way.
How Product/Service Helped
From information to action — that’s the simple pivot to the returns process that Liz Roberts implemented. So many moving pieces relied on the returns process being smoothed out that Roberts decided, instead of simply including information about the returns department and address, Terry Bicycle products would be sent out with a return label.
This would incentivize customers to simply take the label that’s in the package and use it on the same packaging and send the item back. From a customer-facing perspective, this completely simplifies the process.
“Because of the convenience and again because of the speed at which they’ll be credited for the return, they choose to use the label provided. It’s all about convenience and expediency.”
For the team, which is already cross-trained in the warehouse for flexibility, they’re readily available throughout the week to pick, pack, and ship, as well as process returns, and place products back into inventory.
Results
When Roberts and the Terry Bicycles team put the pre-printed label in place, they were apprehensive.
They quickly found that their customer prefers this method for returns, even though it costs them a bit more. While the company includes a small handling fee for arranging and processing, the convenience and speed far outweigh the cost for customers.
But there’s also a sense of choice: If the customer wants to handle the return at the post office directly in order to avoid paying the handling fee, they can. This takes the pressure off and, for customers, makes them feel that they have multiple options.
In tandem with their expectations, this freed up the business’s resources to tweak their warehouse process and cross-train employees. Suddenly, customers’ ever-growing demands are entirely manageable.
“We were extremely surprised that most of our customers now use that label to return the product. It taught us a lesson on the value of a convenient service. People will pay for it. That to me was a big breakthrough.”