RETURNS MATTER
technology that allows customers to print return labels once they initiate a return, he adds. • Maximize in-store operations for returns. Ecommerce retailers with brick-and-mortar stores will bene t by implementing in-store returns procedures. When stores lack these policies, items can linger, depreciating in value and moving out of season, further cutting into potential recovery, Walkley says. Training store employees on handling returns can make a huge difference in effectiveness, she adds. Technology can also help here. Some reverse logistics systems offer decision engines that can help store associates determine how to handle different returns, says Guiste of Zebra. For example, once an associate enters information on an item, an engine might let the associate know whether the return requires refurbishing. Soon, generative AI may make this even easier. An associate may be able to essentially converse with the system, which then will offer directions for handling the return. A Renewed Focus on Reverse Logistics While most e-commerce companies have highly calibrated and optimized efforts to protect product margins on the outbound side—such as aggressively negotiating with carriers and suppliers for lower rates and prices—the same attention is not always paid to reverse logistics. Applying a similar focus to the reverse logistics function offers several crucial bene ts, including optimizing inventory, salvaging potential value from returned items, and enhancing customer satisfaction by streamlining the return experience. Reverse logistics is also a strategic move toward cost-ef ciency, says Nelson: “There is a substantial amount of bleeding that happens on the return and reverse logistics side that needs to be accounted for.” n
86% of consumers look for easy returns
Source: Blue Yonder Global Consumer Study
Yet organizations that fail to think through their returns function and allocate appropriate resources can “leave a lot of money on the table,” Guide cautions. • Don’t forget the KPIs. Many supply chain organizations drive performance, in part, by aggressively monitoring key performance indicators (KPIs) for their outbound logistics operations, but few do the same for their reverse logistics operations, Nelson says. A shipper might start by identifying products that incur higher-than- average returns, and then research the reason: Is the sizing off? Is the description inaccurate? Box? What Box? • Try no-box returns. No-box returns, in which consumers bring unboxed returns to a drop-off location, can help to mitigate fraud and counter lousy return packaging, Ramachandran says. Because consumers aren’t dropping off sealed boxes, they have less opportunity to ship the wrong item, or an empty box. And when professionals pack the returns, they typically can cut the number of exceptions caused by poor packaging. • Optimize, optimize, optimize. Returned items are often shipped between three and ve times before they nd their next best home, according to Natalie Walkley, senior director of marketing at Optoro. Each segment of this journey adds costs. A decision-making engine like Optoro’s can help determine the returns destination based on resale value, cost 81% of consumers will switch to competitors if they have a bad return experience
to process, and other factors, Walkley says. That reduces the number of times returns are shipped, and accelerates the time to resale. “Supply chain network design and optimization is becoming a critical competency,” Kent notes. Shippers need to determine if returns should be directed to the shipping entity, or a third party that specializes in returns. The decision should consider cost and customer service, as well as environmental concerns. • Implement home pickup for high- value customers. One emerging strategy is enabling consumers to schedule return pickups—no box or label needed—at their homes, Walkley says. Because these returns are then consolidated, home pick-ups can cut restocking time, as well as shipping costs. To be sure, home pick-ups come with a cost. E-commerce companies might decide to limit this option to higher- value customers. • Consider using middle- mile consolidation. Middle-mile consolidation, in which returns are collected and sorted at high- volume processing centers, results in consolidated pallets of packages that cost less to ship, Ramachandran says. This approach also presents opportunities to leverage different options for processing, such as routing higher-velocity or higher-value items so they’re returned to stock more quickly. • Pre-print sparingly. Including pre-printed return labels with every order adds cost and complexity, as it requires including tracking numbers and barcodes in both the client’s and the carrier’s systems, Nelson says. This generates vast amounts of extraneous data if the labels aren’t used. It’s generally more ef cient to leverage
142 Inbound Logistics • January 2024
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