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Returns: The Real Hangover of Peak Shipping Season

The holiday season is done, which meant a huge boost in sales for retailers. But with the sales comes the returns. No one likes a return—either making one or receiving one. Retailers must deal with many different types of returns during the holidays, from a sweater that did not fit to a remote-control car that did not work.

Optoro, a tech company that helps retailer with their returns estimates that about $90 billion worth of goods will be returned from the holiday season. Yet only half of holiday returns can be resold again, due to damage, opened boxes, and non-working items. Even if an item is returned in perfect condition, it still needs to be repackaged, reticketed, and potentially transferred to a store.

Online shopping has made the returns process even more complex, and this year, it is expected that more consumers than ever will be doing their shopping online. But as consumers do more of their holiday shopping online, the volume of returns is increasing, adding to the transportation and logistics demands on companies’ already strained logistics operations. Many companies have to absorb part or all of the cost of the returns, with only a small chance of being able to re-sell the item. And, it better be done quickly because consumers are expecting fast and easy returns.

Making the Returns Process Easier

There are a few things a retailer can do to make the process of returns a little easier.

Prevention:  Many retailers are focusing on how they can prevent a return in the first place. Customer feedback can help to determine the reason why customers are returning items, and a good customer service team can help prevent some customers from returning.

Data:  Better use of data can cut down on the number of returns. Logistics providers now have the ability to use business tools to look for buying and returning patterns. The more information a retailer can find out about a customer, the better decisions they can make about improving the returns process, and the design process for future products.

Quality Returns: Most retailers already offer a return label for an easier process, but to ensure that a return makes it back in good condition, some are using sturdier packaging that can handle a longer delivery cycle.  Some are also making repacking more intuitive for the customer. The faster a return comes back and the better condition it is in, the better chance the retailer has of being able to re-sell it.

The Value of a 3PL

Many retailers find that reverse logistics is outside their core competency, so they outsource the task to a 3PL.  A third-party fulfillment warehouse provider can manage returned product, which eliminates one step in the return transportation process. They can focus on getting the most value from the return.

As customers expectations rise, retailers will need to figure out how to make reverse logistics a profitable (or at least less costly) part of the business. A strategy for getting the most value for returns, while determining how to cut down on them, is the key to keeping return costs low.