Turning Online Returns into Profit with Back-Office Automation – Register

Turning Online Returns into Profit with Back-Office Automation – Register2020-10-09T02:42:03+00:00
ON DEMAND WEBINAR

Turning Online Returns into Profit with Back-Office Automation

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Matt Williams Matt Williams Head of Operations and Finance
TOPO DESIGNS
Ebru Saglam Ebru Saglam Sr. Product Marketing Manager
CELIGO

Providing customers an easy method of returns is one way to drive repeat business. However, if not properly planned with the right processes in place, returns management can end up as a costly process for the business.

There are out-of-the-box Returns Management Apps, such as Returnly, that can be leveraged to provide customers a smooth returns experience. However, there is still a lot of work that is required on the back-office for accurate tracking of inventory and cash flows.

In this on demand webinar, Matt Williams, Head of Operations and Finance at Topo Designs, talks about their journey automating their returns management processes end-to-end for accurate visibility on inventory and cash flows.

Our panelists discuss:

  • How ecommerce businesses can leverage returns
  • Challenges with typical returns management processes
  • How back-office automation helped improve inventory and cash flows

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Full Webinar Transcript
okay. So I think we have enough folks here to get us started. So thanks again for joining. My name is Ebru and I work in product marketing at Celigo. So I’m here today with one of our customers, Matt Williams. He is the Head of Operations and Finance at Topo Designs. And so Matt has a lot of experience in leading and designing operational structures for medium-sized companies. And he understands very well the hurdles that growing brands face in the modern retail environment. So which makes him a great guest speaker for our topic today. He will talk about how Topo Designs handle returns management. So yeah, before getting started I just want to give some quick background on Celigo. We are an iPaaS integration platform as a service company. So we have global operations and we have customers worldwide. And we have been in the Gartner Magic Quadrant for the last couple of years. So today we have more than three thousand happy customers. And so our integration solutions, they are vertical agnostic but we are very well known in the ecommerce retail and manufacturing space. So we provide best in class integrations with Shopify, Amazon, eBay, Zendesk, Returnly, and also with 3PLs. And so when I say iPaaS integration platform as a service, what it really means is on the platform applications. They can be connected with each other through integration. And this way business processes can be automated. For example, you can think of integrating Amazon with NetSuite to automate your order to cash business process. So with this integration what would happen is, for example, a new order from Amazon that comes in can be automatically synced into NetSuite for processing and fulfillment. And then the confirmations can be automatically sent back to Amazon once an order is fulfilled. So the whole ecommerce operations can be streamlined this way. And yeah, so returns management. It can be a very high cost and a very resource intensive process on the back end for many businesses. And so before diving into today’s topic on how to scale returns management on the back office. I would just like to take a moment here and highlight the motivation behind why e-commerce or retail businesses are really working hard to provide returns to their customers and also why they really need to optimize their processes. So there are three popular drivers. And number one is to build customer loyalty. So what this means is building positive returns experience like providing customers a way to do easy returns, issuing tax refunds and credits and build customer loyalty, which results in repeat sales. And number two is giving new customers the confidence to buy online because research actually shows that customers tend to favor products with easy returns and this also provides businesses a competitive advantage. And so in fact, a recent survey conducted by Returnly found that 80% of consumers think about the returns experience before buying a product. And so number three is poor returns drives away customers. And again, actually, the same study I just mentioned found that 73% of customers say they won’t shop with a brand after poor returns experience. So you can download this report from Returnly’s website. Providing customers an easy method of returns is one way to drive repeat business. But then what happens is when not properly structured with the right process to set the back office, this can lead to high costs for the business. And now, I would like to invite Matt to talk more on the topic. Hello, Matt. Thank you for joining us today. So yeah. Thank you. Yes. Hello. Thanks for having me. Yeah. Thank you. So yeah. Can you start by providing just a brief intro on Topo Designs? Yeah. So just for introductions again, I’m Matt Williams. I’m the Head of Operations and Finance here at Topo Designs. I’ve been with Topo since June of 2019 and my primary responsibilities include all the back-office activity, and that includes everything from procurement to pay, as well as order cash, so a really wide scope of responsibilities. But I’m really happy to talk about returns. It’s something that we’ve spent a lot of time refining. So I’m happy to jump in. A little bit about Topo, so we are a global apparel and bag manufacturer based here in beautiful Colorado. We pride ourselves on manufacturing products that are, what we would say, is made anywhere for your map. And merely what that means is that you can find our products from anywhere as standing on top of a fourteener here in Colorado or downtown Denver. You can use that bag for multi-purposes. And you’ll just see that our products are really rooted in mountain culture and outdoor living. And then also, we’re just an extremely fast-growing brand. So I’m happy to chat about the return challenges and everything that we’ve been facing through these wild times here in 2020. But I think that’s a good look into the brand – young, fast-growing, exciting brand – and I’m happy to be on board. Yeah, I really love the timeless designs and the vibrant colors seen in the pictures here. So now, can you talk about how you were initially managing your customer returns and what type of challenges you are facing. Yeah, of course. So a little bit of background. Topo, because we do have an apparel division of our business, it comes with all of the return challenges that come with apparel. And so it’s a lot of, “Hey, I’m going to buy a small and a medium just because I need to try them on and send back the small.” So there is a high velocity in terms of return transactions. And a little bit of background of how Topo’s back-office structure existed when I came on board was basically a Shopify to Stitch Labs integration where all of the returns that were being created in Shopify were funneling into Stitch Labs, which then at the end of the day had to be manually– the returns and the credits were happening to be manually booked inside of our accounting system, which was QuickBooks. So there were three sort of tech stacks there that were managing a single refund. And so with that, we saw that there were a lot of variances in terms of reporting. So when one month we thought that our returns were X in Shopify and then they would have a different number in Stitch Labs and it would have a different journal entry inside of QuickBooks. So there was really no clean transactional structure that was supporting returns. And honestly, with that system structure, there was nearly one full-time resource that was just managing that entire process, and that doesn’t include processing the actual physical return. It was just managing the passing of the data between these three systems. So definitely not something that we could scale on. It created all sorts of challenges. Again, there was a [tier?], but it was 100% manual, and that all of the credits and refunds were also being issued without the confirmation of receipt. So because of that manual structure, obviously, it was prohibiting a great customer experience. And so to fix that, there was a decision made to just give people the refund immediately in order to bypass some sort of negative customer experience. And so hopefully that provides a good background. But again, I think the big things are manual, issuing credits without any confirmation of the first quality return, and there was no transactional linking or auditing between the three systems. So just a quick question there. So were you able to really actually sell these returned items? I mean, you mentioned that you didn’t really have visibility into the status, right, if they were damaged or brand new condition. So essentially, what would happen was because we were issuing a lot of these returns in Shopify prior to receiving the product, the actual receiving portion of this returns process was we just opened up the box. We take a look at it. Is it in first quality? Is it something that we could return to stock? And if so, they were just putting it into a pile. And then when somebody at the warehouse would get to it, they would then basically do an inventory adjustment of that inventory to put it back into stock. So it was a manual inventory adjustment and then they would go put everything away. But there was no tying from the actual processing of the RMA back to Shopify. Did this customer actually already get their refund or what was going on? That was a step that was really missing in this process. OK. Thank you. Yeah. So you were basically refunding customers without knowing if they ship the returns or not. And I hear often actually that customers may start the return process but then actually it can happen that they never go ahead with submitting the returns. So I can imagine for many businesses, this can become very costly on the operational side because on top of allocating resources for data entry between the systems, they often also don’t have visibility into the quality of the returned items. So can you also talk about how you leveled up your returns management processes by introducing automation? Absolutely. So it was actually just for Topo, it’s a matter of really good timing. So again, when I joined in June of last year, one of my primary goals was to find a new ERP solution for Topo and actually lead that project of migrating to a new system. So it actually allowed us to evaluate all of our processes surrounding this big project of moving on to NetSuite which is what we landed on. And so returns being specific to that, it really opened up the door to looking at products like Celigo and Returnly. And we got to really take a step back from production and designing a really nice automated flow and being able to do that and implement that at the same time that we were launching a new ERP. So that piece of this whole technical conversation was really beneficial for us to be able to do all of this at one time even though it was a lofty project. But we were able to get it done. And to be more specific into our returns, the very first decision that was made was to look at a returns engine inside of Shopify. And so we landed on Returnly. And Returnly is a plug into Shopify that essentially will process returns and exchanges in a very friendly way for the customer. And so if you go to Topo designs dot com and you click, “I want to create a return,” you wouldn’t know this but you’re basically being redirected into Returnly’s URL and then their product. And Returnly does a really nice job of just gathering all of the details of what this return is going to consist of. And so the next piece of this was cool, we got all of this great return data and all this information. How am I now going to feed this into NetSuite without having to go back to the old days of where we were just hand keying this. And so this is where we got the introduction to the Celigo and Celigo has a very nice pre-built connector that is very much a bundle that you install inside of NetSuite. It’s pre-configured and it’s a really easy integration process between Returnly and NetSuite. And so that was the next step for us was RMA’s being created in Returnly. Celigo is passing the return information into NetSuite and so the next step for us was how am I now processing this return now that it’s sitting inside of NetSuite as an actual return authorization? And that was where we made the decision of actually moving into the WMS world. So step back, Topo Designs we do our own fulfillment. We do not use a 3PL third party logistics company. We do our own processing in terms of anything throughout the throughput cycle. So for us we really needed a good WMS application that could easily process these returns. And so basically that’s what we’re doing at the warehouse. The product shows up. We’re scanning the product inside of RFSmart and we’re receiving the RMA. And so at that point, the RMA has then been processed inside of NetSuite and we use that same Celigo connector back to Returnly and just updating Returnly to say we received this. We’ve received the item. Everything is in good shape. Go ahead and refund this customer and apply their method of payment back to them. And so then once that’s done, Returnly then will go out to Shopify because they’re already connected and up the order inside of Shopify. And then the very last step then is to then process that refund inside of NetSuite by adding the credit memo portion of this. So that’s a very fast and sort of high-level data flow diagram but that’s really what we looked at was using the four products. So again, Returnly, Shopify, RF Smart, and Seleego, by using these four applications we were able to bridge a pretty robust, automated process of managing our returns. And the only manual piece of this that we’re still doing today is just processing the physical return which we’re not in the robotics stage yet but that’s really the only thing that we’re doing from a manual standpoint at this point. So I don’t know if you like me to cover anything more in detail there. But that’s really the high-level automated pattern of what we’ve done. Yeah. That’s great [inaudible] to see how you automated everything end to end. So looks very efficient. And so now maybe you can talk a bit about the key business results you achieved with this automation by automating everything end to end. Yeah, of course. Yeah, I mean how the integration helped us is that scale. So I think it was really the– as I was describing who we are as a company, I can’t stress enough that we are really growing fast and so we have to be able to scale with that business especially if we’re not going to be using a 3PL that can easily scale with us. Well, then we needed a solution that would allow us to scale with the business and so we don’t really have hard results. Like, “Oh, I increased our overall return rate by X percent,” only because that wasn’t the objective. The objective was to scale with the business. And really what we’ve been able to do with this new solution is increase that customer experience. We’ve gotten great survey results. Instead of Returnly, it was a fast, easy, and timely process and then also because it’s fully automated, we no longer need that person. We were able to transition that person into doing something for the business that was much more effective and yielded a better result for the company. It also allows us now to do same day RMA processing. So the day that the product arrives and we’re able to process that return, the customer’s getting their credit right away. There’s no manual steps in that. So it’s allowing us to just quickly turn through the RNA process. And then I said this before but again just the overall cost avoidance. If you would have kept the same process that we were using prior to this new integration, that one person could have quickly turned into four and it just would have been an extremely expensive way of processing our returns. So I look at the biggest win for [inaudible] as just avoiding all of this cost had we not made the change. The return on our investment with this new tech stack and been easily justified. And then there also is a general decrease in our overall returns. Because going back to a point I made earlier when we were just refunding people without actually tying things back to like, “Did we actually receive this return? And is it first quality?” Well, just by us not issuing the refund until we’ve verified the customer’s returned it and it’s in good shape, that alone has decreased our return percentage by a few points. And so those are the overall wins. And it’s really just been a pleasure in terms of being able to put this integration together and just see how I can now step back and now focus on what is the analytic results from this so we can now go into analysis mode of, “Okay. We have good data. We have great reporting. Now, let me work with my ecommerce team to see how we can start really sharpening our pencil and looking for even more savings through the returns process.” That’s great. And it’s very interesting to hear that you also had a decrease in your overall return percentage because I mean that’s something that often happens, but that’s not really brought up all the time. So it’s an interesting thing. So one other thing I wanted to ask you here is: so how did this all affect your inventory? Did you also get better visibility into your inventory levels with the automation? Oh yes [laughter]. So we did implement our RF-SMART, which is the WMS system. And so one of the beautiful features of that is when processing the RMA, it’s automatically adjusting that inventory and returning it back to stocks. And so what it’s allowing us to do is being able to sell that inventory the moment we return it back to stock. And there isn’t this it’s sitting in this phantom bin somewhere that hasn’t been adjusted in the stock. And really, our accounting system isn’t even aware that this inventory exists. So our inventory accuracy has improved leaps and bounds. I mean, we just went through a physical inventory in June this year. And we had a 99.9% both physical and bin accuracy. So it’s just been phenomenal in terms of having that returns process dialed. It just helps our inventory accuracy just leaps and bounds. I mean, if that process, again, is not dialed, your inventory can get out of control really fast. Thank you. So yeah. So before we move on to the Q&A session, could you also talk about other integrations you have with Celigo and how those helped you? And for the audience, so if you have any questions, right now is a good time to enter them into the chat or questions window. So I’ll let you speak, Matt. Yeah. So we do have one other integration with Celigo. And that’s our Shopify to NetSuite integration. And really what that is is just an end-to-end automation with order processing. And again, very similar to Returnly or the Returnly integration, Celigo has this really nice pre-built bundle that you’re able to install into NetSuite. And it’s authenticated by both NetSuite and Shopify and essentially allows us to automate our order processing from end-to-end. So starting with the order capturing all the ways through sending that person a fulfillment status. So basically, all of our fulfillment are synced into Shopify with tracking information. Inventory is being updated every 10 minutes. And it’s just really, really dialed in terms of inventory accuracy, the customer getting the appropriate communication that they need to in a live manner. So the great thing about Celigo in this connection is that there’s both scheduled flows, but there’s also automated flows based on when transactions are being created. And so one of the cool things that I have experienced with this particular integration is the moment an item fulfillment is being created and we’ve shipped this product, that flow is scheduled to just go automatically. And there’s not this big sinking process that I’ve experienced in the past where there’s just this data that builds up. And then once every hour, it’s getting pushed. I mean that customer is getting live feeds of what’s happening throughout that order process. And it’s a really, really nice product. Yes. So I hear actually that [inaudible] that Shopify-NetSuite integration or any other integration between a storefront or marketplace and an ERP system can really help boost customer satisfaction with faster processing times. And so customers, they received their orders fast. But I think another aspect here, what I hear is that also now there are less mistakes happening in the shipping of the items. For example, the chance of shipping out incorrect color sizes also significantly decreases with automating the flow of the order information between the systems. Yeah, I couldn’t agree more. I think with this particular integration when set up appropriately, I’ll highlight– just to give everybody an idea in terms of transactions. I mean, just today alone, we’ve probably pushed back and forth over 1,500 to 2,000 transactions. And I’ve had to do zero work with that. I mean there’s just no errors. There’s nothing to monitor. And then that gives you a lot of peace of mind for those of you who’ve lived in different integration models or doing it manually. It could be a real nightmare. And I can tell you the peace of mind with this product is worth the spend alone. Thank you so much, Matt. So that was an excellent presentation. So to summarize, having automated processes at the back office to process returns order significantly reduces manual efforts. And it helps businesses saving costs on operations, accounting. Also saves them time. And it also helps with, I think, visibility into cash flows and inventory levels. So yes. So now, we’ll be taking some questions. So if you have any questions, please type them in the chat window Yeah. Don’t let me off easy if you have a tough question. Yes, I see, there’s actually– so yeah. One question is: hey, Matt do you offer exchanges or credit via Shopify gift cards? I guess this is specifically for the returns. Yeah. No. So with Returnly– and that’s a great question because that same Returnly application that we’re using in Shopify also handles our exchanges. And it’s a really nice automated feature on their end where, essentially– to make a long story short, essentially what it’ll do is it’ll give them a credit to apply to their next order. However to receive that gift card or credit, we have to see some movement against the tracking number that they were assigned. And so it’s very automated. We’ll give them an email saying, “Here’s your packing list as well as your shipping label.” And once you see some transaction or activity against the shipping label, Returnly will automatically give them the email saying that they have credit or a gift card to place their exchange order. But yes, we do do that. And that’s also a flow that is– or that’s a transaction that’s legal handles between Returnly and NetSuite. Okay. Great. So another question. Do you also have customers call in for RMAs? If yes, do your employees stack input the data for the customer which goes through the system? Let me try to answer that and then if I didn’t catch it, let me know. But yes, when you initially set up the back end– so when you’re putting this legal integration together between Returnly and NetSuite, you get to be very selective of the fields that you want to map into NetSuite. And so we chose to bring in everything about the customer, so everything about their order, their original order, the return reason. But you basically get to pick any field inside of Shopify, and you’re able to map it into NetSuite as well as any field that would be inside of Returnly. And we do bring that information in just because one of the best benefits of this integration network is being able to provide robust reporting back to our product team. They really understand what’s being returned, what was the reason this was returned, and then now we can really go attack the source of some of our return issues. Did that answer the question? Yeah, I think so. So if not, please feel free to type into the chat or questions window. So yeah. Another question is: do you do exchange just off of returns? We do. So basically, the way our exchange process works, again, is when a return is created, and then we allow the customer to place a new order with an exchange credit. So like very much a gift card. And again, so we will process the RMA, refund the original order, and then give them– I’m sorry. We’ll process the RMA, however there’s not a credit applied to the original order. In lieu of credit, we give them a gift card to place on a new order. It’s basically an open credit for them to use. Okay. I think there is a follow up question. It says do you utilize the instant exchange functionality in Returnly. Why or why not? We do not. However, the reason why is we actually would like to see that there is. Some activity that the original item has been returned. And so there are a lot of levels that you can use in Returnly only in terms of the threshold there. Some want to wait until they have received and verified it’s in first quality. We elect to use the moment that we see that the tracking number has had some activity. So they drop it off at a UPS store, or UPS, or FedEx, or whoever your small parcel carrier is, that there’s some scanning activity that’s happened to that. And then we’ll issue them the credit. So we do take a little bit of a risk of not visually seeing the product quite yet. But again, I mean, it’s a very, very, small margin of error there. Okay. Thank you. So do you do up sells? If so how do you map the additional charges processed by Stripe? Not sure if I understand that question on the upselling piece. I think I understand the concept there. But essentially if the order, I think if I’m following you correctly, if the order, say we give them exchange credit and they want to buy something that’s more expensive or we say, “Hey, you should try– you didn’t like this bag. You should try this one,” and it might be slightly more expensive, we will map that in as a new sales order. And then it will come in as a gift card. So we’ll have the gift card for their credit that’s owed. And then there will be a cash sale for the difference and we map both of those records. I think that’s what you’re asking. Thank you, Matt. So another question, how easy is it to manage the integrations? Do you have technical staff taking care of these? We don’t. So I am actually are our technical resource internally. I did not have a background in managing integrations prior to this. So you know good on Topo for letting me take a swag at it. But honestly, the Celigo integration and that process of putting these together can be done by a non-technical person. Now, depending on how technical your skill set may be, the beautiful thing that I saw through the shopping experience with Celigo was they’re willing to help you in a variety of different ways. So I felt comfortable and felt a little bit more technical probably than most. So I didn’t need a lot of assistance with the original integration. However, if I would have went into that conversation saying, “Hey, I don’t know anything about integrations. I don’t really feel comfortable doing this,” and correct me if I’m wrong from the Celigo team, but they can scale with you and they can they can provide you with as little assistance or as much as you possibly need. Just know that you’re going to pay for wherever direction you may lead. So do you have any re– yeah, go ahead. I was gonna say just one more point on that. Once you are up and running, I’m spending– I just have a routine in the morning to check errors or anything that may happen, it’s a 30-second exercise of just looking at the integration looking at the status. They have a really nice dashboard that just tells you basically the statuses of all your flows, if there were any errors then you’re able to fix and then figure out what is the error and you’re able to fix it inside their application and just reprocess that flow. It’s really really buttoned up and it does not take a technical resource to figure that out. Great. So another question is do you have any recommendation for when it is a good time for starting with integrations? Yeah, I would recommend, again I’m not sure who the audience is here, but if you haven’t made the jump yet to a more robust ERP system, so anything from NetSuite to Microsoft the vision and all the large players out there, I think that’s the best time to do it. It’s the best time to just jump in and automate and look at all the tools to make your life easy, because to me, NetSuite is a great engine and it does a great job of supporting our business as a whole but it definitely needs a lot of integrations to make it even more robust and even more automated. So I think that’s the best time to do it. Now if you’re already on a NetSuite, then I think the best time to do this obviously is just when you’re transactional volume is the lowest. So we actually made our integration. We went live on January 1st. So we decided when the Christmas holiday period. We just basically blacked out our calendar from Christmas all the way to the first of the year. We just went dark and we just cut over to this new process. So I think it’s one. You know when you’re jumping onto a new ERP structure, it’s a great time to look at all your integrations. And then two, when you actually have decided to make the switch, I would pick out a time on your calendar when your business is the slowest and that way you’re not feeling rushed and you’re not messing up productions too much as you’re making the change. Great. Thanks. So one last question we have is, I work in accounting. So could you summarize what were the gains for accounting teams? Yes, I love accounting. Thank you for asking that. So for accounting, this is by far going to be the best thing for you because all of the financial transactions down to the GL level are all handled through this automation and the processing of returns. So when that RNA is being processed, automatically, at least in NetSuite, so let me clarify that. Automatically, the credit is going to the right GL account and inventory is being adjusted back into stocks. So you’re seeing that inventory adjustment. The cog is being refunded appropriately. So there’s really nothing from a manual standpoint that accounting has to do outside of your normal records that you would do when you’re managing your month-end process or however often you’re reconciling. But there shouldn’t be any journal entries involved in this process. So in my opinion, accounting actually walks away with the best win especially if you’re on the manual process that we were on prior. Thank you, Matt. So one question I see is can we get a recorded copy of this to share with the rest of our team? And I can answer that, yes. Recording will be shared with all the attendees. And I believe those were all the questions we had for today. So thank you everyone for attending this webinar. So you can e-mail us with any further questions you have at [email protected] And also you can visit our website at Celigo.com. And you can see more resources, customer use cases, and also you can view our upcoming webinar. So we have webinars very frequently and interesting use cases for retail e-commerce. And our teams, they’re always interested in hearing about your challenges with your business processes and your questions about integration. So please feel free to reach out. And thank you very much again, Matt. That was a great insight. So we appreciate you speaking today. Thank you. Yeah. My pleasure. Thanks for hosting. Yeah. Have a great rest of your day everyone. Thank you. Bye.