Retailers prepare for months for the all-important holiday season. According to the National Retail Federation (NRF), the holiday season can account for as much as 30% of an individual retailer’s total sales. The NRF also notes that the holiday returns process accounts for about 24% of returns for the entire year. Online retailing combined with in-store sales has created a mountain of returns, and as a result, retailers are struggling to gain control of the returns management process. UPS has even established a “National Returns Day,” which took place January 5, 2017.
Technology can help increase efficiency in the returns process. Numerous startups have developed solutions to address the returns management process in unique ways. For example, one startup partners with retailers and manufacturers looking to resell returned items as well as excess, unsold merchandise. Software is provided to retailers to manage and redirect their extra inventory and returned products for sale on sites such as eBay, Amazon and others.
For specific industries such as the high-tech and telecommunications industry, there are specialized returns management providers. One such business refurbishes damaged or defective products such as smartphones, laptops and tablets and sells through its online channel and offline franchisee. In 2015, FedEx acquired Genco, known for its reverse logistics handling and the upcoming returns season will reveal the merit of that acquisition.
Another way in which technology can improve the returns process is to understand the data generated from returns. Oftentimes it is difficult to harness this data and, as a result, it could mean a missed opportunity for retailers. A group of startups are focused on this data dilemma and have devised analytical solutions for retailers to understand their return rates, identify fraud, reduce the number of returns and create customer value.
There are a growing number of ways for consumers to return items, but what if the consumer has a number of returns to different retailers? For about $5.00, one startup delivery company will pick up the returns, package and ship them to each retailer. The consumer simply opens the app, selects the retailer, enters the order number, provides the reason for the return and takes a photo of the item(s) being returned.
Keep in mind; it’s not all about the startups. Traditional third party logistics (3PLs) and transportation providers have embraced technology to improve their returns management solutions. Visibility, tracking and alternative pick up and drop off locations are among the growing capabilities these providers are bringing to the table to help retailers.
One thing is certain; the traditional reverse supply chain can be long and complicated, with goods traveling from consumer to retailer, then back into stock for resale or to the vendor, wholesaler or a secondary buyer. Not only is the returns process long and complicated, it is costly. Many retailers tend to accept the high cost of returns as inevitable, but technology is changing this perception. How to benefit from technology offerings will depend on retailer’s needs. Whether the decision is to utilize a startup, a traditional 3PL partner or a combination of both, retailers will first need to understand how returns impact their bottom line. Once the financial impact is known, then they can research their options. It could mean switching logistics partners, adding a technology provider, or simply renegotiating the shipping charges. Either way, there are increasingly more options for retailers to manage returns. Retailers should incorporate returns management into their strategy when planning for the holiday season and throughout the year.
John Haber is the Founder and CEO of Spend Management Experts. With over twenty years of transportation spend management experience, John has helped some of the world's leading brands drive greater efficiencies through their supply chain operations while reducing transportation costs. John began his career at UPS and is widely considered one of the logistics industry's foremost thought leaders on transportation spend management. In 2016, John was named one of the top 100 Supply & Demand Chain Executive Pros to Know for the fifth consecutive year.