At goTRG, we envision a near-future where rising returns don’t equate to significant losses. In this reality, retailers won’t have to wait until returned items land in their stockrooms, distribution centers, or returns facilities to decide how to handle them. Organizations won’t have to rely on outdated contracts or linking disparate pieces of software. Instead, they’ll manage unwanted items with the same ease and expertise as their brand new inventory. Retailers will recover higher margins, at quicker speeds, across more categories. They'll produce less waste, reduce shipping fees, and optimize resources. Digital brands and brick-and-mortar retailers will eliminate inefficiencies and improve recoveries by making smarter returns decisions upstream.
Downstream Returns Management Costs
- Costly disposition mistakes
- More staff required
- Unnecessary shipping fees
- Lower recovery
Returns management costs are on the rise across all areas. Freight, the most significant expense, rose by 42% last year while labor rose by 16%. These numbers indicate retailers must do everything possible to reduce unnecessary transportation miles and processing touchpoints. Yet they lack the necessary tools to meet these objectives.
Our data shows retailers can only reshelve about 5% of in-store returns, which means they ship the vast majority from stores to various locations including, consolidation centers, regional distribution facilities, returns processing and repair centers. When they finally arrive at returns centers, warehouse staff must determine which unwanted products should be refurbished and circulated back into inventory, liquidated, thrown away, or sent back to the vendor per the policy agreement.
The problem is warehouse associates don’t always have visibility to vendor contracts or market conditions to make the most profitable decisions. For example, they may decide to liquidate an item that could have been easily turned into a finished good and sold on a B2C marketplace channel for a higher recovery. Or they might send a product back to a vendor for which they could have received an automatic credit without shipping it back. This downstream, manual decision-making is prone to significant error. It also takes two months for the reverse lifecycle process to take place. Along the way, retailers pay to store these products while they sit and lose market value. In the end, this process can cost more than the product's resale value.
At $761 billion in annual retail returns, this inefficient process adds to significant losses compounded by retailers absorbing reverse shipping costs. Retailers have good intentions about wanting to fix this problem, however managing returns is very complex and requires additional resources and capital, and therefore selling new full-price inventory becomes the priority. Sometimes, returns that could have generated revenue are thrown in a dumpster or liquidated because retailers lack the tools to disposition products at the critical point of return. Fortunately, emerging in-store and eCommerce returns management technology does just that.
Benefits of Upstream Returns Management
- Increased efficiency
- Enhanced customer Loyalty
- Cost savings
- Higher recoveries
Embedded in point-of-sale (POS) systems, in-store returns portals empower associates with information to instantly and cost-effectively handle every item they scan back into their system. Such integrated interfaces can recommend actions based on curated data and algorithms that analyze processing costs against the product’s market value. The extraordinary benefit of these plug-ins is that they drastically reduce returns processing time, shipping requirements, and warehouse resources, opening the doors for more profitable resale paths. Saving time also means retailers can rapidly resell items before they depreciate. This is especially important for electronics, whose value relies on the “new factor,” and apparel, whose worth changes with the seasons.
Upstream software for eCommerce stores provides similar benefits by instantly determining the most effective way for customers to return online orders. In addition, eCommerce plugins enhance customer loyalty by providing a seamless user experience and directing them to the quickest, most convenient refund path.
In-store Returns Technology: How it Works
Ideal in-store returns portals come in the form of third-party apps that directly connect with stores’ existing POS systems. This integration means associates don’t have to log in to separate platforms to access the information. They simply scan an item’s barcode as usual and wait for the embedded technology to determine the next steps. The software instantly calculates customer demand, transportation expenses, repair and remarketing costs, sales velocity, and pricing trends to make decision about how to process the return. It then feeds the decision directly to the clerk’s screen.
Depending on the situation, the associate will know whether to restock the return, send it to a warehouse, or back to the vendor for store credits. Additionally, they’ll receive packing and shipping instructions to eliminate all error potential. This seamless information flow means retailers can rapidly optimize returns recoveries with very little IT investment or staff training.
eCommerce Returns Technology: How it works
Online returns management software works nearly the same for websites as for physical stores, analyzing the product attributes to make returns decisions that garner the highest recoveries. The primary difference is that the end-user is the consumer rather than a store clerk.
eCommerce returns portals connect to websites’ existing order management systems to guide the entire process from beginning to end so that customers don’t have to log in to a separate website to utilize this technology. They can simply initiate the return through the store’s website and follow the instructions generated by the technology.
In some cases, the integrated returns engine may direct customers to convenient drop-off locations or provide shipping labels to send the product back to the closest return center. In other cases, the software may calculate that a product’s resale value doesn't warrant the required transportation and labor costs and instead offer a returnless refund or an exchange (with no additional shipping cost) to incentivize the customer to keep the item.
The beauty of this technology is that eCommerce brands of all sizes can integrate it into their website. From boutique brands to global giants, all omnichannel brands can radically optimize returns with an intelligent reverse plugin.
The Bottom Line
Every organization wants to recover higher returns profits, but they’ll always fall short if they continue to make disposition decisions further downstream. Fortunately, integrated portals that manage returns from the moment they’re initiated can eliminate inefficient and error-prone processes by empowering retailers with immediate and cost effective decision making capabilities.