DDP and DAP
Optimise the returns process for Importing Goods to Switzerland
Optimised returns processes for your e-commerce business
Returns management is already complex in national online trade, but in cross-border e-commerce it can quickly become a nuisance that can cost money. If your returns logistics aren’t optimised, foreign customer satisfaction will fall and you’ll notice the decline in your KPIs. This will be because:
- Logistics costs are rising.
- The administrative costs are higher.
- Refunding of your customers is late.
- You can't reclaim the customs duties on the repatriated goods.
- You have no or insufficient control over fraud cases.
- You cannot respond to customer needs, or if you can it’s only at a late stage.
As you can see, there are some stumbling blocks in returns management. Take a moment to read through this blog, including tips on returns management in cross-border e-commerce with Switzerland. We will show you what’s important, while specific topics are linked to more detailed information and blogs. What’s more, in our highlight boxes you will see how all of this relates to your KPIs. Ready? Let's go!
You have a choice: customer-friendly or customer-unfriendly returns management.
Basically, there are two different returns set-ups you can choose from: the national returns management and international returns management. Take a quick look at this overview:
International returns management
Here the shipment from your Swiss customer is handed over to the selected service provider. This provider is responsible for ensuring that the shipments are shipped directly and across borders back to your warehouse in the country of origin. In doing so, they will pay duty on each return shipment individually.
Your Swiss customer has these expenses:
- Applying the correct value of postage
- Did you know? The costs for this can be several times higher than national returns management
- Customs declaration via CN22 labelling
- Take a quick look at what he has to enter on the form:
- -Organise pick-up or drop-off at the drop-off point of your service provider
National returns management
Here your Swiss shopper sends the return to a returns centre in Switzerland. There the consignment is registered, a content check is carried out if necessary, and then it is consolidated for the most cost-effective return transport. Pretty convenient for your client, isn't it? This set-up is ideal if you have more than five returns per day.
The advantages of this return option are obvious:
- More favourable logistics costs per return, as only national dispatch costs are incurred.
- Convenience for your Swiss customers. They don't have to fill out a complicated customs clearance form (CN22).
- You can actively promote the national return address in your online shop. This is a strong USP because this convenient way of handling returns is still not standard.
- Swiss customs duties can be reclaimed.
- The repayment is already triggered one day after the return is made, giving your Swiss customer the greatest possible security and creating trust.
The disadvantage of this return variant is
- The administration is somewhat larger because it requires two return handling systems: one from the Swiss returns centre and one from the German or Austrian returns centre.
For the sake of completeness, we would like to briefly introduce another variant of the national returns management system. If you operate physical shops in Switzerland, you can have your returns sent to your Swiss shops. There they are processed for resale. This variant requires two important components: the first mile solution (more on this later) and a clever IT solution that controls which shop receives which shipment. This type of return is rather rare, so we will not go into it in detail.
Here’s a brief summary of the points that are a part of national returns management:
- First mile
- Location of the returns centre
- Returns entry (check-in)
- Returns processing (Content Check)
- Returns Case Management
- Transport preparation
- Back customs clearance
- Export customs clearance
- Return transport
In the following chapters we will explain these points to you in more detail.
Would you like to discuss your customised and optimised returns process with a professional?
First Mile - here we go
For the First Mile you need a separate logistics service. By far the most widely used solution in Switzerland is called "Business reply item" (GAS). It enables efficient returns and is therefore used by most online retailers.
GAS is a proven product of Swiss Post, which operates by far the densest network in Switzerland, with 3,909 drop-off points. The advantage for your customers is obvious: they can drop off their returns around the corner or quite comfortably on their way to work. Swiss people most often hand in their returns to an agency, as the following figure shows:
The fact that the rate for the Post office variant in Switzerland is twice as high as in other countries is clear proof of its quality. Swiss Post has an extremely dense network that the Swiss appreciate.
As a cross-border trader, do not underestimate the importance of comfort and convenience when returning goods! Foreign logistics companies or courier services also offer return solutions. Due to the high costs, however, their network is far from as dense as that of the local favourite, the Swiss Post. This is particularly true in rural, less frequented places. This means a large number of your customers would have to make a great effort to return the products.For example, they might have to post the shipments in a neighbouring town.
- Professional tip:
Do not underestimate your customers! In particular Swiss shoppers, who shop abroad more often than other nationalities, are much more likely to seek out information relating to your returns set-up. They also examine much more closely how they can return the goods. They know that for them, the effort involved in sending it back is greater than with local e-commerce retailers - and they stop shopping if they don’t find what they’re looking for. The result is poor conversion rates.
Let's assume that the Swiss shopper doesn’t research the return solution offered by the shop or he doesn’t understand the potential consequences of buying from abroad
He buys the goods, but wants to return them upon receipt. He is now forced to make a disproportionate effort, resulting in a negative customer journey. Will this customer buy something from this shop again, or recommend it? I don't think so.
Location of the returns centre - the geographical location counts
Your Swiss customer does not care where your returns centre is located within Switzerland. For him, it makes no difference, either in terms of cost or convenience, whether it is just around the corner or on the other side of Switzerland.
For you as an online retailer, of course it makes a difference! It makes sense for you that your returns centre is as close as possible geographically to the country of origin. This way you can minimise your return transport costs. It is best if the warehouse in which the goods arrive from Switzerland and the one in which the goods leave again are one and the same. This enables you to return your shipment with the same carrier and the same truck that brings the goods to Switzerland.
Swiss Post has the ideal solution: a returns center in Rümlang near Zurich, which is located in the immediate vicinity of Zurich-Kloten airport.
Returns entry (check-in)
Let's imagine that a delivery vehicle of your provider for the First Mile arrives at your returns service provider and unloads all returns there. These are then pre-sorted to simplify further processing.
After this presorting, the consignments are recorded. To do this, the label of the return is scanned - or entered manually if the label is damaged.
For further processing there are several possibilities:
- Non Content Check: The shipment is neither opened, recorded nor checked.
- Disposal: If it is not economically viable to return the goods, you can order your returns service provider to dispose of the goods. A distinction is made between certified and non-certified disposal. Certified disposal is monitored by a certification body during the process. This ensures that your goods are disposed of in accordance with the law.
- Content Check: The package is opened, the content is captured and checked if necessary. Read more about this in the next chapter.
The non-content check is the fastest and therefore also the cheapest option, and the majority of cross-border traders use them. It is recommended for retailers who normally only ship one item, and also for retailers who ship a small value of goods. If the value of the goods is higher, a content check is worthwhile because the potential for fraud is clearly higher, and so is the resulting damage.
Ideally, the return label number is linked to the import data. Then the IT department of your returns service provider delivers an automated report on a daily basis (see the following table). Alternatively, the data can be entered manually, but this is much more time-consuming and error-prone.
- Professional tip:
- Fast refunding goes hand in hand with a good customer experience. Every return is a chance to deliver a fantastic customer service and build customer loyalty! This will lead to a positive effect on the repurchase and recommendation rate.
Returns processing (Content Check) - how flexible is your returns provider?
Most traders prescribe individual Standard Operation Procedures (SOP). For process flow reasons, it therefore makes sense not to mix up the different requirements of the retailers when processing returns. For this reason, the returns should be presorted per retailer in goods receipt.
Here’s some examples of how different SOP can be:
- Retailer A simply wants to check which items have been returned.
- Retailer B wants to make sure that all buttons on the garments are still sewn on when they are returned.
- Retailer C wants to check that all batteries are present in the returned unit.
- Retailer D encloses a physical return slip with the outbound delivery. The customer can indicate whether he wants a replacement product in a different size.
There are many different possibilities for content check processes. We have listed the most common ones for you above, and they all cost time and money. You need to bear in mind that in the national returns setup, these processes are carried out in Switzerland, which means that the effort involved is more expensive than in other countries.
Wage costs in Switzerland are higher, so it’s all the more important that processes are carried out via an intelligent recording system. It’s difficult or even impossible to meet the individual and very dynamic demands of the various dealers with a static IT system.
This challenge can only be mastered by a sophisticated recording system with dynamic IT, which can be adapted quickly and without development costs to individual retailer needs. Here is a good example:
With such a tool, the user interface for returns can easily be adapted.
In this example, the retailer attaches a physical returns form to the order. When the buyer returns the goods, he can indicate that he wants to order a certain item in a different size. The employee in the returns centre reads the form and enters the relevant data (e.g. size etc.) of the newly ordered item into the database.
The data should be automated as much as possible in the content check. It certainly makes sense to transfer the EAN codes of the individual products already in the import data. Normally, the individual products also have a barcode that corresponds to the EAN number. This guarantees that it’s possible to scan the individual items in a shipment by means of operators. Here’s an example:
The IP system should now be able to perform a comparison with the imported data and identify which of the originally imported items are being returned. This enables precise daily reporting to the trader as well as exact listings for back customs clearance.
Returns case management - good organisation is everything
Of course not everything always runs like clockwork. For example, sometimes a clothing item arrives at the returns centre in a very poor condition. Then what?
There are basically two options here:
- A clear procedure has already been defined for this case in the SOP. In it, for example, it was specified that in such cases the garment is disposed of, and this option is already provided in the mask shown above with a button. In this case, however, we are not talking about case management, but about a standardised execution.
- If this case is not clearly defined in the SOP, case management comes into play. The employee records the article and case - in this case the broken garment - and creates a report for the retailer, ideally with a photo.
Although these cases describe different processes, reporting can be efficient and therefore cost-effective.
As a retailer you should define clear communication paths with your returns service provider. You should also check whether your returns service provider is supported by clever IT. If communication and data acquisition are integrated into the returns system, reporting is much more cost-effective.
Wenn Kommunikation und Datenerfassung ins Retourensystem eingebunden sind, fällt das Reporting viel kostengünstiger aus.
This is the standard procedure:
- The employee recognises the defective garment.
- He takes a picture with his smartphone.
- He sends the photo via his private email account to a company account.
- He writes an email on the company account and attaches the photo.
- He sends the email and the picture to the dealer for clarification.
- He places the return shipment, unsorted, on a large shelf.
- Two days later, he opens his email box and reads the dealer's instructions.
- Now he uses the tracking number and his memory (if he was the one who sorted the parcel at all) to search the warehouse for the exact parcel in order to process it as requested by the dealer.
- The invoicing is based on estimated time expenditure. It is entered manually in an Excel table for each customer.
Pretty complicated and elaborate, right? We will now show you what the optimal procedure looks like:
- The employee recognises the defective garment.
- He clicks on the option "Case Management / Capture Photo" in his returns interface.
- He takes a photo with the digital camera connected to the return system.
- The system now automatically loads the image into a central email and sends it to a contact stored in the customer profile.
- The returns system automatically creates a case and informs the employee in which storage bin he should store the package.
- As soon as the customer's reply arrives, a member of staff is notified. He finds the storage place without further ado and carries out the dealer's instructions.
- Billing is carried out according to a clearly defined time schedule and is automatically listed in the monthly statement in a corresponding report.
Consolidation - how to save effectively
For retailers with very large volumes, it may well make sense to return products daily from the Swiss returns centre. As a guideline, several 100 returns per day are considered.
If this is not the case, the goods should be consolidated for cost reasons. The consolidation limits can be defined over a certain period of time (for example, returns every two weeks) or over a certain quantity (for example, when eight euro pallets are complete).
The consolidation ensures that the return transport unit costs are massively reduced. The volume determines the costs - as is usually the case in logistics. For a concrete illustration here are two scenarios:
A Sprinter from Basel to Cologne and export customs clearance will be organised for the return transport: Total cost €350. You would like to consolidate your items in the Swiss returns centre for one week before they are returned to your warehouse for resale.
Within a week, 100 returns have been collected there, which have space on a euro pallet.
- Your return transport costs per piece therefore amounts to €3.50.
The same Sprinter and the same customs clearance again amounts to €350. But this time you consolidate your articles for eight weeks. This results in eight Euro pallets full of goods (the maximum capacity of a Sprinter) and 800 return packages.
- Your return transport costs per piece therefore amounts to €0.44.
A striking difference, isn't it?
Of course, we have to include the additional storage costs in this calculation. Unit costs will therefore increase slightly in situation 2. Nevertheless, there’s still a significant price difference.
So when it comes to costs, you have to weigh up the trade-off between dead storage abroad and the return transport per item.
- Professional tip:
Do not underestimate the impact of consolidation on your returns logistics costs! Take a close look and calculate different options.
Transport preparation - clever packaging means optimising volume
What’s important here for you as a trader is volume optimisation. This topic has already been partially covered in the section Content Check, but let’s take a look at this in more detail.
As a retailer, you basically have the option of telling your returns service provider how to package the processed items. Here are the most common options:
- The articles are put back into the same carton or plastic bag in which they came.
- The articles are packed in large sturdy plastic bags.
- The articles are packed in medium or large cartons.
- The articles are packed in special containers in Euro-pallet format or in mesh boxes.
As a general rule, and particularly in the case of clothing, it is more likely to harm the goods if they are packed in larger outer packaging. This option is therefore more suitable for traders who sell cheap goods or goods that are reconditioned in the warehouse.
Back customs clearance - this is how you can claim back the import duties
Do you know what "return transportation payment" means? Simply put, this means that when you export back to the country of origin, you can reclaim the customs duties that you paid on import. Logically, this only applies to those items that you actually physically return. For example, if your customer has ordered two jeans and a sweater, you pay customs duty on all three items when importing. If your customer returns the sweater afterwards, you will only get back the customs duty you paid for the sweater.
The basic prerequisite for the return payment is that you know exactly which items are actually physically returned, so a content check is highly recommended!
Caution: If an appeal finds that customs duties have been reclaimed from the Swiss state for goods that have not been returned, this is an infringement.
Clearance back is useful for traders who have paid correspondingly high duties for importing goods to Switzerland. For fashion retailers, this amounts to between 2CHF and 4.70CHF per kilogram. The gross weight, i.e. goods including packaging, counts too.
Moreover, the whole thing is only relevant for traders who have sent their goods to Switzerland via DDP logistics. That means they paid the customs duties themselves.
The whole administrative process should be executed by your logistics service provider.
Clearance is a service that must be paid for accordingly. It looks like this:
- You must pay a certain percentage (usually 10%) of the recovered duties to your customs agent as a commission.
- Usually you pay a minimum amount (usually 100CHF), but there is also often a maximum amount (usually 750CHF).
Returns aren’t possible without export customs clearance
In order for your returns to leave Switzerland in accordance with the law, they must be cleared through customs for export. For the export customs clearance as well as for the issue of a transit note (T2), you need a customs agent, who will do this for you at a charge.
Return transport - know how
If you have a very large import volume and therefore a high volume of returns, it makes sense to bring your return shipments back to your warehouse daily via import transport.
There are two return transport options for dealers who have less volume:
If the volume of returns (due to low return rate or low import volume) is so small that it makes no sense to organise your own transport, the goods can be consolidated and returned to the retailer by post or courier, if the return frequency is acceptable.
In the case of medium return volumes, it is better to consolidate them for a long enough time so that you can use your own van to full capacity. This is a cost-effective way to return them to the dealer's warehouse.
Here’s a summary of the most important points:
- Never underestimate returns management! It’s an important part of your customer experience.
- Returns management is extremely important, especially for trade with Switzerland. For volumes of more than five returns per day, you should definitely rely on a national returns management set-up for the reduced costs and improved customer experience.
- Think hard:
- Do I have a good SOP that provides a clear and efficient process for me and my returns service provider, and saves money?
- Can my returns service provider digitally record my SOP and report accordingly? - How long should I consolidate my returns in Switzerland before I return them?
- Can I save additional time and money by having my returns service provider pack my items into larger units? - Is it worthwhile for me to pay back the customs duties?
Do you want to know how you can save costs?