packaging returns. The costs generated by shipments that have unreadable labels or are poorly sealed and open during transit quickly add up, Ramachandran says. Adding urgency to the need for ef cient returns is the perishable nature and seasonality of many items, particularly in fashion.
Yet, companies can’t inordinately tighten, let alone eliminate, return policies and still remain competitive. Returns are a crucial part of the shopping experience. More than four in ve shippers rank the returns process as very or extremely important to customer loyalty, nds a recent Penske survey. What’s more, consumers who make returns tend to be loyal customers. Optoro research shows approximately two-thirds of consumers tend to make most of their returns at stores or locations where they shop or spend the most. The result is a “fundamental clash,” says Matt Guiste, global retail strategy lead with Zebra Technologies Corporation. Consumers want fast and easy returns, he notes, yet retailers often struggle to offer this cost-effectively. Reverse Logistics Headaches Almost 40% of online retailers list fraud as a top returns challenge, notes Vijay Ramachandran, vice president of go-to-market enablement and experience for Pitney Bowes. While fraud isn’t new, it has ramped up as more purchases have moved online. And, even honest consumers often aren’t skilled at WORLDWIDE RETURNS GROWTH
Enabling online customers to make in-store returns is a smart way for retailers to quickly oer product for resale, helping to optimize the value of returned goods.
“Most retailers have a limited window for re-merchandising returns,” says Matthew Hertz, co-founder of supply chain consultancy Second Marathon. Returns also add complexity to a company’s overall supply chain network. An order might ship from one warehouse, while its return is directed to another location or an outside party, like a logistics provider, for instance. In addition, customers often use the majority of their allowable return window, leaving retailers without those products for a period of time. To compensate, a retailer may need to hold more inventory than would be necessary if returns occurred more quickly. Overall, organizations need to focus on both reducing the costs of handling returns and maximizing recovery of the returned items, says Gaurav Saran, founder and chief
she’ll suggest customers start with fewer items than they had in their carts. And by introducing travel sizes, Soapwalla enables customers to experiment with different products before buying full- size items. The Soapwalla team also tweaked product descriptions on the website to highlight, for instance, which products are particularly effective for conditions like eczema or rosacea. Heading O Returns Along with customer service, technology can also help to head off returns. A growing universe of AI tools helps customers with sizing concerns. A solution might let customers know that if they wear a size large in Brand A, they’ll likely need an extra-large in Brand B. Virtual tting rooms are gaining popularity, too, notes Jamie Dixon, senior director of supply chain with TMX Transform, a supply chain consultancy. Retailers offering virtual tting rooms use augmented reality or AI to place virtual products over an image of the customer, so they can check the size, style, and t. With some purchases, it makes more sense to let customers simply keep the product they were planning to return. Pipsticks, an e-tailer of stickers and other low-cost paper products, takes this approach at times. “With our price points, our policy is to tell the customer to give the product away to a friend instead of returning it,” says Nathaniel Vazquez, the brand’s co-founder and CEO. “It’s not worth the cost— nancial or environmental—of a return.”
$1.8T
executive of cer with Reverse Logix, which offers a returns management solution. From 'Gift Gone Wrong' to 'Return Right' In developing a returns strategy, one starting goal is reducing the overall volume of returns. “It’s more ef cient to deliver to a customer exactly what they want the rst time around,” says Rachel Winard, founder of Soapwalla Inc., a provider of vegan skincare products, who has taken a proactive approach to reducing returns. She works with clients as a “skin care sleuth” to help them identify the products that will best meet their needs. At times,
$643B
2015
2022
Source: IHL Group
138 Inbound Logistics • January 2024
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