How RFID Can Help Retailers Manage Returns

As the retail sector continues to make an impressive recovery and overall sales increase, so does the volume of product returns that must be processed. While e-commerce has been a critical revenue stream contributing to retail recovery, reports identifying that a remarkable 18.1 percent of all e-commerce orders are returned highlight the challenges associated with omnichannel selling. As the returns process continues to take up a disproportionate amount of retailers’ resources, it may not surprise consumers that some retailers are beginning to charge fees for returns, with some companies making headlines for their revised return policies and protocols.

Introducing fees or other financial measures to help offset the financial impact of retailers doesn’t address the underlying pain points in the process. Retailers that continue to disadvantage themselves by not enhancing their returns provisions through technology are missing out on opportunities to streamline the returns process. The utilization of technology can help retail companies implement efficient returns practices that promote sustainability and engender customer satisfaction, while limiting impacts on profitability.

Analyzing Current Provisions

Returns are a consistent challenge within the retail sector as inefficient and disjointed return processes complicate supply chains. On top of directly impacting retailers and their staff, existing returns processes may impact other factors such as the environment. With suggestions that retailers disregard or liquidate approximately 40 percent of their returns, it's clear that alternative measures need to be introduced if retailers are to improve both the efficiency and sustainability of existing processes.

Manual returns are labor intensive and take up significant amounts of associate resources at point-of-sale and service desk operational touchpoints. This labor could instead be allocated to improving the in-store experience of customers in an effort to drive additional sales. The opportunity to streamline the returns process in both stores and supply chains for retailers is significant. Inefficient and burdensome returns processes directly impact profitability by absorbing resources and presenting little benefit in return. The ability to quickly identify and categorize items for immediate resale, repackaging, or waste and then execute the corresponding workflows for those items is critical. RFID is a key technology that drives efficiency and accuracy in the process.

How RFID Can Help

RFID technology can help retailers with their existing returns provisions by providing clear insights into inventory and stock management, improving the customer experience. With findings from SML indicating that RFID solutions can bring about stock counts of between 93 percent to 98 percent accuracy, implementing RFID technology is a proven solution for retailers that wish to streamline their returns process. In addition to inventory accuracy, RFID can further streamline this process by scanning each product tag throughout the multiple stages of the supply chain, resulting in an easily accessible history and tracking of each item. RFID also aids in the execution piece by allowing the accurate identification and allocation of returned items to the proper operational channel, such as resale, repackage or disposal.

With improved accuracy and visibility, retailers can ensure the best possible provision of returned items, which improves profitability and reduces friction for customers, who are in turn less likely to look to competitors for an improved experience. Overall, RFID technology enables retailers to limit the impact returns present to profitability and also empowers them to execute sustainable and efficient operational practices.

Dean Frew is the chief technology officer and senior vice president of RFID solutions at SML Group, the leading RFID solutions provider.