Getting Value from Returns: Optimizing Your Reverse Logistics

by Admin July 27, 2017

Click-and-collect is now a hugely important service for many retailers and other businesses. Allowing customers to order online and pick up merchandise at a local brick-and-mortar location is a crucial strategy for everyone from Wal-Mart to Walgreens.

However, offering the convenience of click-and-collect often comes with a cost, and it’s one that many early adopters have struggled to manage.

Retailers are struggling to make their click-and-collect operations profitable, largely due to the huge increase in returns and related costs they’ve generated.

This has led some retailers to charge fees for placing click-and-collect orders, but this tactic is at odds with consumer preferences and may have costly repercussions through the loss of sales and traffic that they could have generated if they offered free returns.

The negative consequences of ineffective reverse logistics are underlined by results from KPMG’s 2016 Omnichannel Retail Survey. The survey found that:

  • Free returns are driving extra online purchases and additional store traffic.
  • Free returns and speedy reimbursement are viewed as part of good service.
  • 72% of consumers would be unlikely to shop with a retailer if they had a bad returns experience.
  • 67% of consumers say free returns is the most important factor when considering a return.
  • 15% of all online returns and 23% of fashion returns are intentional; many shoppers order multiple items and physically test products for the first time on receipt of delivery.

The results show that customers expect and want free returns, and you need to get it right when offering them. Many consumers also use returns to take the fitting room or showroom home, so they’re over-ordering with an expectation of returning items.

The resulting challenges and costs are why some retailers are struggling with click-and-collect profitability. However, rather than impose fees and potentially lose business, companies should look to optimize their returns logistics to save costs, improve service, and achieve click-and-collect profitability.

The Three Pillars of Profitable Returns Logistics

To get the returns experience right and achieve profitability, companies should consider three pillars:

1. Reliability. It’s imperative to get returned goods back into your system accurately, by using scanners, mobile computers, or RFID. Best practices suggest that it’s important to provide customers with multiple channels for returns, including in-store, via pick-up, or through return lockers. However, wherever and whenever the item is returned, scanning and processing has to be fast and reliable.

2. Accuracy. Businesses must use inventory visibility to quickly send goods where they’re needed. Stock may go out and be returned through a variety of channels, so you need to know where returned stock is and where it’s needed to accelerate order fulfillment and reduce unnecessary inventory.

3. Speed. While it is important to handle returns in a way that satisfies the customer and minimizes costs, it is equally important to recirculate stock as quickly as possible. Many returns will be ready to go straight back to the shelf, which means improved availability. In-store relabeling and scanning items to return them to the stock keeps your wider inventory up to date and reduces the risk of overstocking.

Getting Practical Help & Insights

We can help you implement these three pillars with some free resources and insights.

Our partners at Zebra Technologies have published an insightful and practical eBook, “Three Steps to Click & Collect Efficiency.” In the eBook, Zebra uses case studies and real-world examples to show what the click-and-collect process should look like and how to make it profitable.

You can also reach out to us for advice, recommendations, and support. At ASI, we work with Zebra to design systems and solutions to optimize your reverse logistics and make profitable click-and-collect possible. Contact us now for a free consultation.

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