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Reverse Logistics

Product Returns Processing: Optimizing Recovery Potential with reCommerce

The US secondary market has been rising for the past couple of years. However, secondary sales grew by a record 32% in 2021 as a result of rising eCommerce returns. In particular, online resale is the fastest growing secondhand channel. Customers are increasingly aware of the value of pre-owned goods, making reCommerce an essential strategy that retailers, manufacturers, and resellers can harness to recover lost profits from returns and overstock merchandise.

The reCommerce marketplace has become increasingly congested with competitors vying for market share in the complex reverse logistics landscape. At the same time, secondary market sales is not a guaranteed strategy for any brand, given that the margins are even slimmer than first-hand sales. To emerge as profitable, brands and resellers must partner with experienced reCommerce providers to sell through inventory for as high of a recovery as possible.

Resale Marketplaces: How Online Retailers are Leveraging reCommerce & Returns Management Solutions

reCommerce is primarily the practice of reselling returns and pre-owned items through online marketplaces at a discounted rate. However, in today’s post-Covid retail world, reCommerce is not so narrowly defined. In addition to selling returned and pre-owned items, reCommerce also applies to overstock, slow-moving and distressed inventory. Additionally, resale marketplaces don’t just apply to brands like Amazon and eBay. Products can be resold on the original retailer’s platform like Walmart.com, or a multi-seller marketplace like Groupon, Poshmark, The Real Real, Back Market, or StockX. Finally, the outlets don’t have to be consumer-facing. They can also be wholesale marketplaces like Direct Liquidation or goWholesale.

Tackling Challenges in reCommerce with Product Returns Processing Software

Brands and retailers face an oversupply crisis, a 20% eCommerce return rate, and budget-conscious consumers who are pulling back on spending; there is tremendous opportunity for them to benefit from eCommerce returns solutions. The barrier they face is finding the right eCommerce returns management software and service provider. Several multi-channel software tools exist today and offer the ability to help brands sell across multiple online platforms simultaneously, but these solutions fall short for two key reasons.  

‍eCommerce Returns: The Complexity of Liquidating reCommerce Goods

Multi-channel sales software is excellent at selling new items with fixed prices, specifications, and conditions. It was not designed for reselling aberrant goods that require product return processing, nuanced sales tactics and listing rules.

For example, pre-owned goods exist in various conditions, from never-touched to like-new, blemished, and damaged. Each reCommerce platform has different criteria for product return processing and categorizing these conditions—along with different listing templates for each of the product’s attributes. Out-of-the-box software can’t assess product quality or accurately apply these nuanced rules to reCommerce listings, putting the seller at risk of facing non-compliance consequences. Sites like Amazon are notorious for suppressing listings that don’t comply with its strict guidelines.

More importantly than compliance, it’s about determining a product’s actual resale value. Most multi-channel resale software follows arbitrary pricing rules like “take 70% off” rather than considering the condition, brand, product type, category, or seasonal demand. Since a like-new Dell laptop generally loses more value than a like-new iPhone, it’s critical to create distinct discount reCommerce solutions and strategies for each. Resellers must partner with a service provider that can harness historical and real-time demand data to delineate product types and conditions accurately.  

eCommerce Returns and Navigating reCommerce Channels

Every multi-channel sales software lists pre-owned products and excess stock on the same ten to fifteen major eCommerce sites. However, Amazon and eBay are not always the best reCommerce channels for every product. These enormous platforms are undoubtedly successful, but they’re also extraordinarily crowded, not to mention rigged against third-party sellers by Amazon’s data mining practices.  

The best reCommerce providers look beyond global eCommerce giants to specialized marketplaces. Back Market, for instance, is a massive resale platform for top consumer electronics. VIP Outlet is a lesser-known resale channel offering new and refurbished apparel, home goods, electronics, and general merchandise. Niche marketplaces like these may have fewer monthly visitors than major multi-channel sites but have loyal followings, consistent demand, and less seller competition.  

Critically, adept reCommerce service providers assess every possible resale avenue, including wholesale, to garner the highest recoveries and velocities. Wholesale may seem like a low-margin game, but goTRG’s case study showed that updating reCommerce software logic to include strategic wholesale channels increased annualized revenue by 20%. In fact, more than half of the 2,000 products assessed sold for higher prices on wholesale than retail channels.  

Product Returns Processing and Unlocking Profit Potential

Increase Profits with eCommerce Returns Solutions

A retailer’s goal is to send as much returned stock to the original manufacturer as possible. However, 30–40% of returns aren’t eligible for vendor credits, as is typically stated in their returns management contract, so retailers must find alternative disposition routes. Traditionally, retailers sold salvageable returns to liquidators for pennies on the dollar, but that approach is far from profitable. Outsourcing secondary sales to the right reCommerce provider allows retailers to sell these goods for 60% or more of their retail value. Even if retailers can do that for 3–5% of unwanted inventory, our data shows they can increase profitability by 20–30% overnight.  

Outsourcing eCommerce Returns Management to Help Protect Brand Equity

Brand protection is another significant benefit of outsourcing secondary sales to a third-party provider. By passing unwanted or slow-moving inventory to resale experts, retailers and manufacturers can anonymously sell discounted products without competing with their higher-priced inventory and training customers to expect deals. Additionally, anonymity ensures retailers don’t get blamed for inconsistent product conditions. This process ensures they preserve brand integrity.

Better Shipping Rates

Smaller resellers, in particular, can reap massive shipping savings from outsourcing secondary sales to experienced third-party providers. Unfortunately, smaller businesses don’t move a lot of volume, so they don’t have the leverage larger sellers use to get discounted shipping rates. As a result, they pay exponentially more per parcel than major sellers like Walmart, cutting into their scant margins. Small sellers can take advantage of far cheaper freight rates by partnering with major reCommerce and returns management providers that bill to consolidated accounts for various customers.

‍reCommerce Platform Privileges

reCommerce marketplaces give special rights and privileges to sellers that move the highest volume. For instance, top brands appear first in search results and easily qualify for Amazon’s coveted “buy box.” Additionally, larger sellers are less likely to face penalties, like getting suspended for accidentally violating Amazon’s listing policies. Smaller sellers can take advantage of the same marketing and branding benefits by outsourcing reCommerce to experienced resellers with longstanding channel relationships, positive reviews, and high volumes.  

reCommerce and Product Returns Processing Software & Service Features

Pricing and Repricing

reCommerce service providers utilize software that recommends the best starting price based on consumer demand, product condition, and desired profit margins. Plus, the software continuously reappraises items’ value based on shifting demand, suggesting a higher or lower price to maximize real-time recovery and velocity.  

Listing and Channel Tools with reCommerce Returns Management

reCommerce providers can automatically harness the intricate features of a reverse logistics management software to list qualifying inventory across various consumer and wholesale channels. Sellers set the rules and recovery goals, and the software automates the rest of the listing process. That includes images, product descriptions, inventory levels, and specs to comply with diverse marketplace listing rules.  

Improving End-Customer Support with Product Returns Processing Software

No one likes to talk about this, but shoppers return returns, presenting management complexities for inexperienced sellers. Fortunately, the right secondary market partner will manage returned returns with a returns management system to identify whether the customer is eligible for a refund while managing communication, reverse shipping, and ultimately the eventual resale.  

Product Returns Processing Velocity and Recovery

Multi-channel sales software and service providers focus solely on sale price. However, in reCommerce, the most intelligent approach is to balance recovery and velocity goals for every item. The right service provider understands that new consumer electronics will sell fast for about 70–80% of their retail value. However, old apparel, last-generation smartphones, batteries, and overstock home goods won’t warrant the same recovery. reCommerce providers will select the appropriate channels and price point that balance recovery with the fastest sell-thru rates.  

eCommerce Returns Solutions and Catalog Management

Color, size, dimensions, weight, and product images are not enough for reCommerce listings. Sellers need all identifiers, including GTINS, UPCs, conditions, individual parts, accessories, etc. It’s challenging to gather all this information manually, and most sellers won’t know where to find what they need. However, sellers that work with experienced reCommerce providers don’t have to because these partners have built enormous proprietary product catalogs that automatically fill in missing data.

Bottom Line

As secondary sales boom, so does reseller competition. Brands that want to stand out from the crowd must outsource their reCommerce needs to a data-driven organization that can identify, categorize, list, and value second hand goods. The right partner will have eCommerce returns and resale experience with every major marketplace, knowing the best channel to use and how to price an item for maximum recovery.

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