Can Returns Save Retailers This Holiday Season? How to Convert Returns to Backstock in Time for the Holiday Rush

A record number of cargo ships are backed up in U.S. ports. There aren’t enough dock workers or truck drivers to distribute every new shipment. The global supply chain is strapped.

All of these issues combined are leading to a significant amount of out-of-stock inventory and frustrated customers. Retailers are scrambling to prepare for a busy holiday season, and they’re finding creative (and expensive) ways to stock shelves. Major retailers like Costco and Walmart are leasing their own container ships. Some companies are even pivoting to air cargo ahead of the holidays. These solutions can be complex and costly, creating a whole new set of challenges.

However, there’s a hidden solution that often gets pushed aside: returns.

See Returns as Inventory (and Get Them Back in Stock, Quickly!)

This year more than ever, returned items can help mitigate the supply chain shortages we’re experiencing. Instead of leaving returns to pile up in warehouses, retailers need to take advantage of every single piece of inventory. Most retailers already have some returns on hand and waiting to be used, so they’re an ideal way to boost in-stock inventory ahead of what’s shaping up to be an especially chaotic holiday season.

Retailers can speed up their returns processes and get items back on shelves using a few different tactics. First, they can embrace artificial intelligence and machine learning to determine the best home for a returned item right as the return is initiated, rather than shipping an item back and forth a few times, slowing down the process and increasing the environmental impact.

They can also invest in an integrated inventory management system that will restock returns as inventory online the second they’re received. If you have an online return portal in place, for example, you will know about returns before they even come back, keeping you one step ahead and getting the items back in the hands of customers as soon as possible. But if you’re stuck with sending out a return label in a box, you won’t be able to forecast what’s coming back until it hits the distribution center.

Another way retailers can speed up their returns process is by moving it further upstream. Can you empower sales associates to evaluate returned items and restock them within their store if they’re in perfect condition? For returns heading back to distribution centers, can you have a designated team ready to review and evaluate items as soon as they arrive? These activities save extra steps and hassle, making sure returns don’t have the chance to pile up and get left behind.

Take Advantage of Resale Markets

Returned inventory can work for retailers in multiple ways. If, for example, an item has been sitting in a warehouse for a long time and is no longer able to be returned to stock due to it being out of season, then resale markets are the way to go.

Resale is booming this year.  Nearly 225 million consumers in 2020 said that they have or are open to shopping for secondhand products, and this interest is only expected to grow. Major brands like Madewell, Adidas, and Fabletics have all doubled down on their resale platforms in the past year.

It all makes sense: resale offers retailers an opportunity to sell excess and returned inventory, keeping it out of landfills and clearing out warehouses to provide space for new items, while providing consumers with near-perfect condition merchandise at a discounted rate.

To get started in the resale game, retailers need to first organize their excess inventory. This step has become especially vital as returns have skyrocketed during the pandemic. Getting organized will give retailers a better sense of the types of product they have, the conditions of each product, and what type of resale solution is the best fit for them. From there, retailers looking to get into resale can determine if it makes more sense for them to create their own white-label platform or, instead, to grow a presence on an existing platform. No matter which avenue a retailer chooses, resale will be an essential tool for maximizing the benefits of returns.

Returned Inventory is a Sustainable Solution

One of the biggest benefits of returned inventory is that it provides a solution for retailers immediately. It’s a hidden treasure piling up in warehouses that retailers can use today. While this type of immediate solution is necessary, and has the potential to have a huge impact on retailers overwhelmed by supply chain shortages, it’s also a solution that will move the industry toward a sustainable future.

Returns have been mismanaged and tossed aside for too long, all because retailers don’t have the resources to process them. This has resulted in massive amounts of waste, with 5.8 billion pounds of returned inventory ending up in landfills each year. Consumers are becoming more savvy and demanding sustainability from brands, so adopting returns practices now will be a win-win for retailers trying to satisfy their customers and create actionable steps toward meeting sustainability goals.

During an especially busy holiday season, it’s completely valid to want to focus solely on the immediate problems, which proper returns processes can do. However, they also offer the unique opportunity to not only address today’s headaches, but also minimize problems cropping up in the future.

Tobin Moore is the CEO and co-founder of Optoro, a company that offers a superior complete returns solution that helps retailers process, manage, and sell their returned and excess inventory.