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Optimising Reverse Logistics and Getting Value From Returns

Posted by Steve Northcott

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May 5, 2017 at 3:00 AM

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One of the core reasons that retailers are struggling to make their Click & Collect operations profitable is the huge increase in returns that Click & Collect has generated.  Retailers who may have innocently thought that offering another channel and wider choice for the customer was just another box to tick-off have been caught out by the fact that the omni-channel reality has meant a change in customer mindset, which means they have to deal with the complexity of more returns.

That this change in how customers think and act is real, and permanent, and is having repercussions today, is underlined by results from KPMG’s Omnichannel Retail Survey 2016:

  • 23% of fashion returns were intentional
  • 72% would be unlikely to shop with a retailer if they had a bad returns experience

The first figure tells us that customers are “taking the fitting room home”, over-ordering with an expectation of returning items.  Returns are inarguably on the increase and this is the future for retailers.  The second of the two figures above reinforces why retailers have to get it right.

Time is money

The irony is that, with the amount of returns happening today, returns have in fact become the “biggest supplier” in terms of inbound volume.  This means that there is a very large amount of money tied up in returns.  For most of the year this could arguably be seen as a “cost of doing business”, but at Christmas this can come to a crunch, as a recent Daily Telegraph article (‘Clear Returns’) points out:

“By mid-December, £600m worth of stock bought between Black Friday and December will be tied up in the returns system, preventing retailers from selling the items during the crucial sales season.”

The ‘three pillars’ of returns logistics

All of which goes to make the case for efficient processes that make money rather than eat up profits.  In terms of getting this right, we might do well to consider three pillars:

  • Reliability
  • Accuracy
  • Speed

For reliability, it’s imperative to get returned goods back into the system accurately by using scanners, mobile computers or RFID.  Best practice in terms of customer experience suggests that it’s important to enable shoppers to return through their choice of channel (in-store, lockers, pick-up).  This only goes to further re-inforce the fact that wherever the item is returned and whenever it is dealt with, scanning and processing has to be reliable.

In terms of accuracy, retailers must use inventory visibility to send goods where they are needed. With stock going out and being returned through a variety of channels, retailers need to be on top of their inventory management. Knowing where returned stock is and where it is wanted is important for accelerate order fulfilment and to reduce unnecessary stock holdings.

The third pillar is speed: while it’s important that retailers can handle returns in a way that satisfies the customer and minimises costs, it’s equally important to get stock back into circulation again as quickly as possible. Many returns will be ready to go straight back on to the shelf, which means improved availability for customers wanting these items. In-store re-labelling and scanning back into the stock file keeps the wider stock picture up to date and reduces the risk of overstocking.

Returns are here to stay

Returns are inevitable, and they are on the increase, so retailers need to deliver customer convenience in the returns process.  Developing improved Click & Collect processes isn’t a nice-to-have, it’s an essential.

Zebra have published an insightful and practically helpful eBook “Three Steps to Click & Collect Efficiency” which uses case studies and recent real-world examples to look at what the ideal Click & Collect process should look like.  And above all, it keeps a strong focus on making it profitable.  You can download the eBook today.

Topics: Retail, EMEA, Click and Collect