Rethinking Your Reverse Logistics

Soon after the holidays are over we shift from the season of giving to the period of returns. The 2021 returns period post-holidays was different from others; extended return deadlines caused a massive backlog with regards to shipping and processing. In addition to the extended deadlines, retail companies such as Walmart made it easier for customers to bring back their items by partnering with FedEx to pick up customer returns — at their doorsteps — for no additional cost.

With the fiscal year 2020 revenue of $524 billion, Walmart can certainly absorb the added return costs of shipping, processing, and other associated refund transaction fees for some time. However, many other retailers don’t have the financial resources to compete with these added conveniences, as their profit margins will certainly take a notable hit if they attempt to absorb these types of return costs. The good news is that there are several customer return options within the grasp of those retailers that don’t have billion-dollar revenues.

One of these options is Refund Now, Return Later/Exchange Now, Return Later. Using a smart returns platform such as Returnly, shoppers can receive a rapid refund. Returnly acts as a type of middleman by instantly putting funds back into the customer’s pocket from an item returned, giving them the opportunity to select another item for purchase. It also offer a similar process for exchanges, where the customer may receive their desired item before the unwanted item is returned. Returnly provides a unique tool for retailers, enabling them to heighten customer satisfaction without taking on unnecessary expenses.

Another choice for retailers is Your Home, Your Fitting Room. This option has its roots in online shopping, and the customer indecision that comes when a shopper cannot decide which garment color is best or what particular size is the best-fit selection. The net result of the indecision is multiple purchases of the same item, which has the inevitable consequence of at least one return. Amazon.com is in the process of developing patient delivery robots that wait while purchased items are tried on, however, there's a less expensive approach for smaller, locally based retailers. The cheaper route is to work with delivery companies to implement a waiting period as part of the drop-off process. Couriers pick items up from the store location, deliver them to the buyer, wait while they try the garments on, and return the unwanted items to the local store. The courier approach is a creative method to circumvent mandatory fitting room closings while also strengthening customer relations.

Perhaps one of the best options is Self-Serve, Contactless. The COVID pandemic has removed a great deal of human interaction from the retail experience. Fortunately, technology has stepped up to provide shoppers with the necessary distance they prefer to feel safe, while also enabling them with a means to retrieve purchased items. There are platforms such as iPickup that provide shoppers with a contactless buy online, pick up in-store (BOPIS) experience. These platforms include self-serve, smart-shelving units that notify shoppers when their items have been staged and are ready for pick up. By contrast, the same smart-shelving units can also offer a safe and secure area for buy online, return in-store (BORIS) — without subjecting the customer to long return lines at the customer service desk. Taking it one step further, the same platforms may also be leveraged for buy online, exchange in-store (BOXIS), staging the preferred item for pick up while waiting for the customer to swap it with the unwanted merchandise.

According to the National Retail Federation (NRF), the average return rate is approximately 30 percent — a wake-up call for retailers to come up with better reverse logistics solutions. To properly assess these solutions, retailers must have a means to accurately analyze the full chain-of-custody and determine what impact they're having on the bottom line.

There are many “returns” solutions available to assist with this process, but merchants need to carefully consider which specific platform is best suited for their business. Decisions cannot be made in a vacuum; feedback needs to be garnered from associates and customers, and measured against key performance indicators (KPIs). It’s clear that the pandemic has altered the retail process and those merchants who embrace new methods to conform and improve customers’ experiences while returning merchandise will thrive.

Mo Cheema is the director of solutions design and implementation at Position Imaging, a provider of package management and asset tracking technology.