On this episode of Honest Ecommerce, we have John-David (JD) Klausner. JD Klausner is SVP of Business Development & Strategic Alliances at Loop Returns. We talk about building cost-effective returns flows, delivering convenience and flexibility for the customer, diversifying carrier strategy to save shipping costs, and so much more!
John-David Klausner is SVP of Business Development & Strategic Alliances at Loop Returns. JD has led & scaled commercial teams in high-growth companies across different continents.
He loves building partner ecosystems, channel sales programs (via agencies, consultants and technology partners) that drive revenue impact across all GTM functions and solving corporate challenges with strategic partnerships that unlock new revenue streams.
JD’s mantra is to lead with energy, creativity, clarity, and empathy. When he’s not hard at work with Loop, you can find JD spending quality time with his three kids in Miami.
In This Conversation We Discuss:
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You really don't want to commit to one specific shipping carrier for all your delivery and return needs.
Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game.
On this podcast, we interview founders and experts who are putting in the work and creating real results.
I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.
Let's get on with the show.
Hey everybody, welcome back to a bonus episode of Honest Ecommerce. I'm your host, Chase Clymer.
And today, I'm welcoming to the show the Senior Vice President of Business Development and Strategic Alliances at Loop Returns, John-David Klausner.
Welcome to the show.
Thank you so much. It's great to be here.
I'm excited. So for those that don't know where I live, which I hope is everybody listening, I'm in Columbus, Ohio.
And that's where Loop is actually headquartered and was technically founded out of here, depending on how you want to roll the founder story.
So I've been very good friends with Loop for a very long time. They've been partners with the agency for a very long time. And I'm excited to chat with JD today and dive into things.
So quickly, what's your history? Like with Loop, what was your career like? What led to this position? What were you up to?
First of all, Chase, really excited to be here. Big fan of the podcast and your work as an agency.
I've been in the Ecommerce industry for just over 8 years. I just hit my 6-month market loop. So I'm still relatively a new guy.
But we've hired, I feel like 30% of the company in the last 6 months.
My history prior to Loop, in Ecommerce anyways, I spent seven years at Yotpo as an early stage employee, building the partner ecosystem and team from scratch.
And that was a very rewarding and fun experience from starting in Tel Aviv to relocating to New York to now in Miami, which is where I'm based, and really building one of the most dynamic partner ecosystems out there.
And I was really compelled to join Loop because I'm a big fan of the team, the founder, and the problem we're solving, and it just was that the company is at a very exciting stage in terms of growth and the challenges ahead that was very pumped to jump on board and help accelerate growth for the business.
Absolutely. Our audience here is obviously Ecommerce founders and we're going to talk a lot about the problems that are affecting them.
But oh my, me and you could probably have a whole entire episode talking about how partnerships are the best thing to grow both an agency and a SaaS app.
I am fully on board with partnership-led growth. You have no idea.
Well, just hit me up and we can take it offline if you want to just jam on partnership stuff because it's my bread and butter for sure.
Oh yeah. No, it's fantastic. Awesome. Alright.
So you joined the loop about 6 months ago. Let's just dive into the topics here.
So right now, we're recording this at the end of October and I'm trying to get this out as quickly as possible for everybody listening.
Obviously, we're in crunch time. We've got Black Friday, Cyber Monday right around the corner.
We're approaching what's usually the biggest sales season for the typical merchant, is that Q4 peak.
What are the 3 things that they need to keep in mind during this time?
Well, I'm also blown away that it's already peak season around the corner. And so yeah, basically, peak season doesn't just mean more orders. With more orders also means more returns.
If you're selling a product that's prone to high volume of returns like apparel.
So number one, starting on a more generic level, you really want to prepare to go big. So make sure your business has the right infrastructure.
But at the end of the day, you really want to make sure that not just your Ecommerce tech stack is tight and ready to rock, but that your distribution partners are lined up. Your help desk software solution is ready to receive a high volume of tickets.
And also, more importantly, in our context, that your returns management solution is fired up and ready to go.
So you really want to make sure you have all the right resources in place before you get that surge of traffic, hopefully, and orders, really with the goal of keeping your customers happy and delighted throughout that process.
We know this. Both customers and dollars can very quickly churn if the post-purchase delivery experience isn't done right. So it's really an art and science and preparation is key.
So in addition to preparing to go big you really want to look for opportunities. Now, this is a little bit more Loop return-centric, but to save on shipping.
So you'll really want to budget for increased operating expenses around shipping and carrier services. There's a lot of options out there.
And we're going to dive a little bit deeper into this in a couple of minutes. So I'll put a pin in it for now.
But really, be super opportunistic around saving for shipping.
And then again, going one step deeper in the returns world, you really want to build cost-effective returns flows.
So, Outbound Logistics is a whole other animal. It's a very complex beast as it is, but it's really one piece of the puzzle. And you also will need to budget for reverse logistics because your shoppers are going to be requesting returns.
So to do that, you can really work with vendors like Loop to help create strategies on which policies best fit the needs of your business, which product conditions make sense to offer refunds for, when you should offer exchanges or store credits.
But there's a ton of different models you can explore, such as returnless refunds.
For example, if the product is cheap enough or it's too cheap or the shipping cost is higher than the actual product, you can just leave it with the customer. You can have a return product donated to charity.
So there's different ways you can save on costs on the reverse logistics aspect, but then also boost your brand sustainability efforts.
Absolutely. I think that a lot of merchants, as they are growing... I'm just going to throw an arbitrary number out there. They finally get to that million dollar mark and they're having their banner year as a company.
They just don't anticipate what's going to happen in January from this uptick in customer service in regards to returns or exchanges.
The hangover effect.
Oh, is that... Is that a term? No, that's my term. I just... It's how I can best relate to it. But yeah.
So how can brands... You mentioned there is more to saving on shipping. So how can a brand optimize their shipping procedures and save money during this holiday season?
Yeah. Okay. So in general, I will say coming from the outside in, the whole world of logistics and reverse logistics is new to me. And I'm imagining it's new to a lot of first-time entrepreneurs that are launching Ecommerce businesses as well.
So I'm going to try to not get too in the weeds here and keep things somewhat practical. But there are a few key ways you can optimize your shipping procedure or really save money during this peak.
So number one is really diversifying your carrier strategy. You really don't want to commit to one specific shipping carrier for all your delivery and return needs.
So you really want to be in a place where you can evaluate different carrier options for your deliveries and your returns. So it could be based on a combination of factors like the location, the weight, the type of the product.
But you really, at the end of the day, want to offer optionality for consumers. And really, the bottom line on that point is you don't want to be a single source.
You don't want to just use USPS or just use UPS.
You'll want to leverage what we like to call a basket mix of carriers. And that basically means you'll want to diversify your carrier strategy and it'll not only help you protect yourself, but you'll also see really meaningful differences in annual shipping spend.
So that's number one, diversifying your shipping carrier strategy.
Number two is you want to use automated rate shopping.
So by using shipping integrations like Easypost, EasyShip, not just within your e-comm platform, by the way, but anywhere you need a label, including your RMA tool, you'll be able to rate shop basically based on both delivery and returns to help you find the most effective carrier and route that meets the needs of your business.
So automated rate shipping is critical in addition to diversifying your carrier strategy.
And then the third one is really you want to pre-negotiate or try to get pre-negotiated rates with carriers.
So there's what they call retail rates, which is just the rates that a merchant that maybe doesn't have very high volume will get.
You can try to negotiate with the carriers, but it's a volume play. The more volume you have, the more negotiation leverage you have to get the best possible rates.
And so at the end of the day, the best tactic would be to leverage a solution like Loop that already has... We have buying power. We generate roughly 2 million returns per month.
So those are 2 million return labels that we're generating through our different merchants, so we're able to use that volume and negotiate the best possible rates for our merchants to enjoy for their carrier rates.
So again, just to recap...diversify your carrier strategy, use automated rate shipping, and then also try to leverage your return vendor like Loop to use us to get as aggressively discounted rates as possible based on the fall you're getting.
I hope that makes sense. I didn't get too in the weeds there.
It makes sense to me, but I obviously... I've been playing this game almost as long as you have.
The one thing that I always find interesting about logistics is… it’s usually one of the first things that a brand tries to outsource. They bring in a 3PL, a third-party logistics company.
And these are conversations that you need to be having in tandem with them because quite often, they are the one that's doing the buying of this and then billing it back to you.
So if you aren't even paying attention to those costs, on your P&L and understanding where your charges are coming from, this can quickly get out of control and turn a profitable sale into a bad idea.
Yeah, I couldn't agree more, actually. Our relationship with 3PLs and warehouses and fulfillment centers is super strategic.
And we can dive a little bit deeper into the synergies around an RMA solution like Loop and 3PLs, like the types of integrations, they can have to drive just way more efficiency and cost savings.
But in general, I think we can agree like going to the days of growth at all costs, if you can really optimize your supply chain and logistics operation, reverse logistics operation and really save percentages of efficiencies, that's what differentiates a great business versus an okay one is on the efficiency and the unit economic metrics.
The world of logistics is a whole other animal. But it can really drive a ton of efficiency if you can correct that supply chain or the value chain.
Absolutely. So we're talking about Q4. We're talking about just an insane lift to the natural sales volume.
We're just going to get a lot more purchases. And with that, we're going to get a lot more returns.
So what do brands need to know in order to optimize this return shipping experience this holiday season?
So it's a good question. Basically, at the end of the day, it's all about the customer experience, right? Like you can blast as many ads as you want and acquire as many customers as you want. If you don't deliver a quality and premium experience for your shoppers, they won't feel compelled to come and shop and come back.
And so returns are a massive, massive pain point.
When you start thinking about offline and online, offline, $1 in $20 gets lost because of returns. And online, so our world, $1 in $4 gets lost.
That's 25% of your dollars and customers that could be lost because of products that get returned in apparel specifically.
So you really want to deliver that really quality customer experience. And that means you need to basically have quality returns experiences as well.
You should strive to optimize customer satisfaction, their lifetime value. But if you don't have a really crispy, good return experience, it'll cost you over time a lot.
And so at the end of the day, you want to provide optionality for your consumers that really fits their needs and is flexible. So it can either be in a physical world or in the digital world around how they can process returns.
So I'll double-click. There's a few great examples.
So you really, at the end of the day, it's all about balancing the trade-off between optimizing your shipping costs as a brand and how quickly you can get your product back into stock.
Obviously the faster you can get a product back into your inventory, the quicker that product can be resold.
So at the end of the day, it's all about weighing the risks of either a longer delivery timeline against the benefits of lower shipping costs.
So I know it's like... I'll try to clarify.
So to deliver a quality experience for your customers, there's a few examples that you could do through Loop, which we... It's kind of total out of the box based on our integrations and partnerships that we have that allow brands to deliver this experience.
So number one, there's in-person return bars, where you can physically drop off a product at a location that has a return bar.
So we have a great partnership with Happy Returns. Loop software integrates with their physical return bars, thousands of locations across the country.
The benefit there is it saves the brand a ton of money on shipping costs. But the downside there is that it can take a lot longer for the product to get shipped back to the warehouse. Because with these return bars, they basically wait for a higher volume of products to get returned and then they consolidate them, pack them up, and then send them back to the warehouse.
So that can take 2-3 weeks longer than the standard return approach.
So there's in-person return bars, there's at-home pickup.
So imagine you bought a pair of jeans, you like the product, but it's not a good fit. So you want to return them. You can have soft services like Veho that we integrate with come and pick it up at your house.
That's great because it's incredibly convenient for the customer. And actually, from a time to warehouse standpoint, it's like half the time to get your product from the hands of the customer back to your warehouse. So it could be restocked.
The main downside there is the cost is usually imparted on the customer or placed onto the consumer. So there will be some deterrence around that.
And then lastly, you can have merchants encourage customers to keep products at home if they want to return them. Basically the main pro there is... And this is obviously limited to brands that sell products that are cheaper than the cost of returning the product.
But the pro here is that you're completely eliminating the cost of the reverse logistics flow. You're improving your brand sustainability efforts, and you're making it just much easier for the customer to have to handle it so they could just keep the product instead of returning it.
Again, the main downside is that it's very limited to products that are super cheap. And so it's just, for these types of products, it's just not cost effective to ship or process the return.
So yeah, at the end of the day, just to recap, I know I just went down a rabbit hole there. But it's all about the trade-off of optimizing the shipping cost versus how quickly you want to get the time... How quickly you want to get the product back into stock for it to be resold.
Yeah. And that just goes to show… we can extrapolate on to beyond returns or shipping.
It's just… There are a million ways to approach business and sales and returns. All of these things take innate thought and strategy behind how you want to do it.
And often, I'll encounter amazing entrepreneurs with great growing brands and they're like, “We want to do…We need a return solution.”
And you have to walk them a step back. You're like, “Well, what is your return policy?” And they're like, “What do you mean?”
It's like, well, you have to think about all these little nuances that you're talking about that need to be considered to make sure that they're not losing their shirt on this, offering returns on everything, or if there's a better way to go about it.
And that's why you need to talk to, obviously, subject matter experts like yourself and the team over at Loop, or people that use the software all the time for their brands.
We've installed it in countless stores now. I can't tell you how many times we've gone in and set up the advanced return thing using the on-store solution.
So it's definitely something that takes a bit of skill to understand correctly.
Yeah, 100%. I read this crazy stat the other day. Like an insane number of customers, I think it was literally like 96% of consumers will review a brand or merchants return policies before actually executing the purchase.
That's a massive consideration variable in the buying cycle. So you really want to make sure that you have a well thought out policy.
And at the end of the day, it's delivering convenience and flexibility for the customer in a way that doesn't harm the business from a unit economic standpoint.
So you really want to find the balance between the consumer needs and the business needs.
And that's why I think there's a ton of value in working objectively with a solution like Loop.
We just have this massive accumulated in-house knowledge and insights and data on purchasing behaviors to really give merchants the information they need to create the best policies for their specific business.
And that's really what Loop actually is. It's solving a very unsexy problem in a sexy way that fundamentally impacts the bottom line of the margins for these parallel brands and different types of retailers.
Absolutely. You mentioned how many people view the return policy.
We will often split-test and it usually wins by putting a return hotlink that bounces like, not a banner, but like a pop-up up right there on the product page, quickly so they can see the highlights of the return policy right there when they're about to add to cart and it usually works.
So there you go. Free CRO advice out there. Go test that.
We actually encourage our agency partners to do that all the time too. So I'm happy to hear that you're doing it without us even bugging you about it.
So how can brands curb instances of return abuse? There's a lot of dishonest customers out there.
And especially during the holidays, we're gonna see a lot more returns coming in for I don't know, questionable reasons or whatnot. It doesn't matter.
But if you know that you're getting taken advantage of, are there any solutions to that?
Yeah. So that's a really interesting problem. A big problem actually that we're very excited about solving and committed to solving, with obviously the popularity of the overall adoption of Ecommerce and returns with that.
We've seen that returns fraud and abuse have really picked up. So we're really focused as a business, specifically on the product level, in helping merchants reduce returns, first of all, reduce returns overall, but then also limit fraud and abuse.
And so we can do a whole episode on this. This is a really fascinating space in terms of like...to track consumer purchasing behaviors and flag certain customers.
But just to keep things at a pretty high level because I know this is a short podcast, but really starting with the basics, you really want to optimize your inventory management process.
Like in the most basic level to reduce return abuse and basically cut costs as well.
So number one, and this is, we really encourage all our customer merchants to do this, is integrating your RMS, your Return Management Solution, with your 3PL or their warehouse management system.
And then you can really enable returns to be processed way faster on a warehouse employee level once you can provide that detailed return merchandise authorization or that RMA.
So 3PLs love using Loop because it makes things way more efficient and quicker for them to process returns instead of needing to manually check each product one by one and then figure out what needs to happen with this product.
And so you can go to a deeper level and enable your 3PL to, for example, release refunds once quality control is approved by them.
And so you can really remove the back and forth, which helps just control costs and prevent fraudulent losses.
So that's number one. The most basic level is integrating your 3PL with your RMA.
And then it also goes to say it's important to highlight that you shouldn't necessarily request for every single product to be returned to your warehouse if you don't anticipate restocking that product at the full cost.
Again, you need to have a little bit of a micro economist hat on in terms of figuring out what is going to protect your margins.
So you can do different things like evaluate the condition and type of products and determine like, should that be restocked? Should that be sent to a resale partner? Should that be donated? Should that be recycled?
If an item, for example, is destined for a third-party resale, you can partner with companies like Arrive and Recurate to help you recoup the costs, the overall reverse logistics, but then also lower your carbon footprint so that product gets resold through a secondary channel.
That's a growing trend and we're super bullish on these types of partners.
And then really lastly, just to end it on the abuse side, this is where it gets really exciting from a product standpoint with Loop.
There are different ways in which our product will prevent abuse and fraudulent behavior from reoccurring. So number one, our solution is able to use item-level... We call it grading and dispositioning.
So basically, it's like product-level intel on what is wrong with the product, why it is getting returned, using that data and collaborating with your 3PLs to basically identify serial or fraudulent returners or faulty products as well, by the way.
So this will help you pinpoint flows within your returns process. So the goal here is to really use all the data in these learnings to help you restrict or ban customers who've abused your policies.
And also in parallel, help identify manufacturer defaults or errors that you can help to flag and improve for product level quality down the line as well.
So that's a huge track for us and a huge theme for next year. We're just in terms of the future of the product, in terms of just returns overall, but then also limiting abuse and fraudulent purchasing behaviors.
That's amazing. John, David, I can't thank you enough for coming on the show today.
23:43 Now, is there anything I didn't ask you about that you think would resonate with our audience?
No, I think... I appreciate that question.
No, I think really, what gets me jazzed up about the problems we're solving at Loop is a few things.
There's… It's really like a 3-prong solution.
Number 1. And this kind of summarizes everything we spoke about and what keeps us up at night in this business. Number 1, how do you make shopping easy for shoppers? How do you make it easy for them to have that consideration? Returns are just a reality you can't escape. So we want to make that whole experience as seamless and as smooth as possible.
Number 2 is brands. They pay a lot of money to acquire customers and we want to help them retain those customers. And so returns in general are just not a profitable operation.
The unit economic level, the cost of shipping both ways, getting products back into the inventory, back into the warehouse, refurbished, restocked, it's super time and cost effective. So we want to help merchants solve that and limit the impact.
And then number 3, it's on sustainability, which honestly is a whole other topic that I think is worthy of a podcast episode with one of these...reselling, recommerce partners like Arrive or Recurate, and stuff.
But the whole sustainability aspect is massive and has a huge opportunity for impact, not just on the environment, but also on how brands engage with customers and apply these policies on a much more serious level.
Awesome. Alright JD, I'm gonna be letting you go here. We're running out of time everybody.
There are some awesome resources that they shared with us that we're gonna make sure that we put into the show notes.
They got an awesome ebook on how to optimize reverse logistics during your peak season.
And there's also some other content on their website. We'll make sure to link all that stuff in the show notes.
John-David, thank you so much for coming on the show today.
Chase, you're a legend. Thank you so much. It was an honor and I look forward to following you along the rest of the journey.
We can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes.
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