Reverse logistics; getting value from returns

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I’m told the bedroom is the new ‘fitting room’! A growing number of shoppers (19%*) are buying multiple items with the clear intention of returning those that don’t fit or aren’t wanted; a ‘buy now, decide later’ trend. With such a marked increase in returns, retailers really need to get a grip on inefficient returns handling.

The Daily Telegraph claimed returns cost retailers £180m during the Black Friday period when Brits spend over £1billion. It said that by mid-December, retailers had £600m worth of stock tied up in the returns system, stopping them from selling it in the crucial pre-Christmas sales season.

Click and Collect has really captured the buying public’s imagination. While many retailers saw it as yet another ‘tick-box’ route to market of omnichannel delivery, they maybe didn’t appreciate the implications and complexity that more returns would generate.

We know that 23%† of fashion returns are intentional (and growing). But, more worryingly, 72%† of shoppers are unlikely to repeat shop with retailers if they have a bad returns experience. Retailers must therefore get goods back on sale as soon as possible for both profitability and for the sake of their customers and their reputation. They need to see returns as an opportunity to encourage loyalty and customer satisfaction; faster credit notes mean more sales.

Knowing when a product is being returned is half the battle. The sooner the retailer knows, the sooner they can take action to either replace or refund. When I read a recent whitepaper from eDelivery and Vanderlande, I was encouraged that 58% of retailers were using returns portals. That means four out of ten aren’t, so the first they’ll know about returned item is when they arrive back at their warehouse or dedicated returns centre.

We need to get to a point where processing returns makes money rather than eats into profits. That relies, in part, on the reliability of the scanners and mobile devices processing the unwanted items. It also requires a high level of accuracy and good inventory management. Customers could be using different channels to return goods, from posting them to visiting stores. Knowing where returned stock is and where it’s needed is vital to there being no unnecessary stock holding and to improving order fulfilment.

Speed is also critical in that returned stock needs to be put back into circulation as soon as possible. A lot of returned items will go straight back onto shelves. Being able scan them in-store and re-label them enables stocks to be replenished quickly and efficiently and gives retailers complete visibility of their inventory management.

Having goods returned is only part of the story, knowing why, from where and how often is also valuable information. Real time analytics of data can give retailers fast and useful intelligence on product demand and enable them to position stock more effectively in stores or distribution centres.

Zebra produced a really useful ebook on how to make Click and Collect profitable and it provides useful advice for retailers to help make returns easy. It suggests that scanners, mobile computers and RFID devices are critical in returning sellable goods to the shop floor. I’d add printers to that mix but would also add the caveat that they all need to be operational, which includes knowing when batteries are about to fail, for example.

Having visibility of such assets is critical in ensuring the returns process is as efficient as the original delivery experience. We know that some shopping brands are fantastic at managing returns, but with returns ranging from hours to weeks there is clearly still work to be done so retailers need a smart returns strategy as well as a fulfilment one.

Contact http://datatrade.co.uk for more information or call 01604 666666

* Source: YouGov research from JDA and Centiro

† KPMG Omnichannel Retail Survey 2016

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jane@str8marketing.co.uk'

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