Retailers are on the eve of what will be the most profitable segment of the year. September through to the Christmas season typically means higher volume sales and more customers walking through doors and visiting web sites. But then the best months of the year are immediately followed by the worst, as it relates to returns, that is.
Just like the last few months of the year account for higher sales, the first few months of the year account for the highest proportion of returns, between 40%-60% by most statistics. From January to March, the regret starts rolling in and customers start shipping items back for whatever reason satisfies their conscience. Retailers need to be prepared for this onslaught. And a capable logistics program needs to be in place so the start of the year isn’t complete turmoil.
Reverse logistics is just as it sounds; a system of handling inbound products that have been returned to the retailer. It requires just as much attention to detail and proactive planning as outbound logistics management in order for the process to run smoothly.
The complexity of reverse logistics has certainly increased with the advancement of omnichannel retail and other technologies, but these technologies have also reduced the rates of return. So, the frequency of utilizing reverse logistics has gone down some. Regardless, the issue of return management is still prevalent and needs to be addressed by all retailers.
There’s always a moment where retailers hold their breath when opening a returned package. It’s not unusual to see scraps in place of whatever item was supposed to be in the package. Fraudulent returns are just one aspect of managing that side of retail. Legitimate returns still need to be sorted and several decisions still have to be made.
As a company, retailers must first determine the condition of the product; whether it is damaged, if parts are missing, if it’s functional, or whether the product has expired. Those determinations alone take time and space, and that’s before knowing what to do with the product in each of those circumstances.
Some returned packages simply get tossed away. Others may need to undergo some sort of repair before being put back on the shelf. Recycling products is also an option. In the best situation, a product is returned unopened and undamaged and can be placed right back on the shelf.
Effective Return Strategy
With all the complications associated with returns, what can retailers do to come up with an effective strategy so it doesn’t harm their bottom line? With the goal of maximizing returns, there are a few key steps that should be considered.
Why take on the burden of reverse logistics as a retailer yourself when it’s possible to outsource the work to third-party logistics who are completely competent and ready to take on this challenge? 3PLs will already have a system in place to handle returns, including the technology.
Before any return box is opened, there needs to be an automated system in place by which all employees understand the precise protocol depending on the condition of the product. The only hesitation should be in actually determining the product’s condition.
One concept that some manufacturers are now applying is using data from returned items to create products that will potentially reduce the rates of return. This is a completely proactive approach to managing returns.
Much can be accomplished if retailers are willing, as they have been, to put the trust in third-party logistics to manage reverse logistics. APS Fulfillment, Inc finds solutions to any logistical situations in a fast and effective manner.