Guest post by Optoro, a technology company that is transforming the way retailers process, manage, and sell their returned and excess inventory.
In 2015, retailers handled over $260 billion in e-commerce returns, up 34% from just six years prior. Due to shifting customer behaviors and demands, experts expect return rates to keep climbing. Flexible return policies are customer-friendly. However, the burden largely falls on retailers to recover whatever value they can from returned inventory.
With e-commerce sales showing no sign of abating, interest in reverse logistics – the reverse flow of goods – is growing. Retailers will be best prepared to handle a sustained influx of e-commerce returns if they know the trickiest challenges to watch for — and how to solve them.
Unsure where to start? Here are the top four:
1. Conditioning Items for Resale
When a consumer returns an item, a retailer often instructs staff to ask the reason for the return. But other than “defective,” there’s little information retailers can use to accurately condition a returned item.
Is it open box (i.e., opened, but never used)? Like-new? Used?
Even when retailers can accurately determine the condition of an item, most are not fully equipped to resell it. Retailers often lack the relevant channels, audiences, or technologies to reshelve and resell. In most cases, returned items collect dust in a stockroom or warehouse.
2. Obsolescence with Liquidation
Moving further down the returns timeline …
When enough returned inventory has been collected, a retailer will often decide to liquidate the entire lot. But when it finally comes time to liquidate, the merchandise that’s piled up may be obsolete. Take one-or-two-generations-old electronics or out-of-season clothing, for example.
Looking to recover what little value is possible, retailers may be forced to liquidate everything for a price well below what they could have resold for — if they had had the right tools. This lost value is one of the many reasons liquidation does not provide the best recovery option for retailers.
3. Setting Optimal Policies for E-Commerce Returns
To combat rising return rates, some retailers have actually tightened their return policies. But strict return policies can negatively impact customer loyalty. Though it may seem counterintuitive, flexible return policies actually drive customer loyalty.
Flexible policies afford customers a great deal of freedom, and seem like they could threaten increased e-commerce returns and reduced customer retention. But legendary return policies like those offered by Zappos and Nordstrom help keep loyal customers.
As long as the returns process is seamless and hassle-free, flexibility builds trust. A customer-first approach pays off. 71% of recently surveyed consumers said that a flexible return policy would encourage them to shop at that store again.
4. Lost Warehouse Efficiency
The unpredictability of e-commerce returns can often complicate warehouse operations, making standard handling processes quite difficult to implement. As a result, per-item processing costs in the reverse supply chain run high. Costs climb further when coupled with the conditioning and resale challenges listed above.
Streamlined workflows and handling processes can be huge time (and money) savers for retail organizations. But without the proper technology in place, retailers will be hard-pressed to recover the maximum value from returned merchandise.
New Technologies to the Rescue
E-commerce returns present a handful of challenges that make it difficult for retailers to recover little, if any, value from distressed inventory.
The good news? The growing shifts in consumer preferences has spurred a fount of innovation in the formerly quiet of world of e-commerce returns. New supply chain technologies available on the market can help e-commerce retailers manage their returned inventory with ease.
A sophisticated, holistic reverse logistics platform enables retailers to:
- Increase visibility into their reverse supply chain.
- Achieve higher recovery value for distressed inventory by enabling resale on specialized resale channels.
- Increase warehouse efficiency in handling returned goods.
- Enjoy flexibility as market dynamics continue to change.
Many forward-thinking e-commerce retailers now look to reverse logistics platforms to solve their returns challenges. Are these challenges are plaguing your growing business? Consider learning from their best practices and implementing a reverse logistics platform today.