Getting products out the door in a timely fashion isn’t the biggest struggle E-commerce retailers face, it’s dealing with the returns.
For many retailers, the 2017 holiday season yielded record sales growth with an estimated $680 billion in total sales generated, nearly $25 billion higher than 2016 (source: Statista). One downside to the upswing, however, was an increase in the number of returns. Nearly 28% of the gifts people purchased were returned, at a value of $90 billion, according to a survey from RedStag Fulfillment and Optro. The return expenses for organizations can be anywhere from 20% to 65% of the cost of the goods and poor execution and policies can drive costs even higher, in addition to damaging customer relationships.
Reverse Logistics Challenges
Unlike the forward logistics process, where a customer places an order and items are picked, packed and shipped, a return order isn’t as straightforward. For starters, several questions must be answered before the warehouse/distribution center knows what to do with the returned product. For example, is a customer returning a pair of jeans that didn’t fit with tags still intact? If so, the item can be put back in the original bin. However, what if you’re dealing with a faulty electronics gadget? Things start to get a little more complicated. You have to know whether the item is under warranty and should be sent back to the OEM, or if not under warranty, it may need to go to a repair center or be discarded and written off.