Circular economyCovid-19RetailersReturnsTouching Elbows: a Covid-19 Era Greeting
Right about now, hundreds of thousands of people are feeling nostalgic — or even desperate — to return to some kind of normalcy: to the time before COVID-19 snuck in like a thief in the night and stole our lives.
 
But before we turn back the clocks, I think each one of us — in whatever industry we represent — should be taking an opportunity to root out commonplace unhealthy business practices.
 
Here are 7 ways in which online product returns should move forwards, instead of returning to our bad ol’ ways.
 
1 — Supply Chain Reverse Logistics Inefficiency
In regular times the supply chain is invisible to regular folk like you and I. We order online and our purchase rocks up a few days later. If we want to keep it, we do. If we don’t, we send it back. We do not engage with what happens behind the scenes.
 
What we are witnessing now is the supply chain at the front line of a global war against COVID-19. And like in war, there are casualties and collateral damage. For now, only the essentials are taken into consideration: food, medical supplies and equipment, etc. Some online retailers are closing shop completely. Many retailers have paused reverse logistics without so much as a whimper. The unceremonious halt gives us a moment to internalize that this process is largely inefficient.
 
We need to focus on circular solutions that do not render the reverse supply chain so impossibly long and expensive that it is a no-brainer to cancel it. We should focus on improving local urban logistics to lessen the burden of the backwards journey of retail items.
 
2 — Wastage. Say No More.
We’re all feeling the pinch at the moment. Do we have enough food, household supplies, toiletries? In the Maslow Pyramid, these are the basics that we need for survival. But what about non-essentials, like toys to distract your kids, sports equipment for working out at home, and new clothing and apparel for the seasonal change that is suddenly upon us? For now, these items are not so readily available.
 
Now consider, before COVID-19, in times when online retail stores were operating as normal: around 50% of returns were trashed or sold to next to nothing in secondary markets. Landfills all over the globe were filled with new toys, household items, appliances and clothes the same items that are currently more scarce, were trashed in the name of cost effectiveness.
 
We as consumers and industry stakeholders, should deem it unacceptable for wastage to be the status quo. Whether the items should be recycled and donated as decreed by the legislators in France, or whether alternative resale opportunities should be made available, can be decided based on bottom line, conscience or both.
 
3 — Online vs Offline Turf Battles
Unless you are an omni-channel retailer, the arm wrestling between online retailers and offline retailers is white noise in the retail backdrop. COVID-19 has shown us that this arm-wrestling is redundant. We are all in this mess together. We should all find ways to pull out of it together.
 
When the offline stores get back to work, they are going to need to replenish their stock and to reduce existing stock, which may no longer be relevant to the season. They may need support in (re)hiring staff, and gaining foot traffic.
 
When the online stores selling non-essential items fully restore their operations, they are going to need to find a way to deal with warehouse challenges: overstock in some cases, backlogs and under-stock in others, as well as a flood of returns that will hit the returns warehouse once the crisis has passed, requiring more staffing, storage, and sorting. Whatever the season is, it’s going to rain returns.
 
As an industry we should be finding ways to support one another, not as a once off, but as a sustainable best practice for the betterment of the industry.
 
4 — The Black Shadow of the Carbon Footprint
With the retail industry and supply chain working on a lower flame, we need to admit that in the absence of planes, trains and automobiles there are less fuel emissions and the air is cleaner. We are driving less, buying less, using less, throwing away less. We are being more frugal with what we have and more careful about what we need.
 
This COVID-19 era consumerism cannot be the new standard that would be completely unrealistic but we should also not settle on going back to where we used to be. We see circular economy solutions as being critical to continue to reduce the carbon footprint cautiously and pragmatically.
 
5 — Overconsumption Because We Can
We all do it. We buy too much: things we think we need, thinks we know we don’t need, multiple items in the same size but different colors, the same item in different sizes but the same colors. From our seclusion, we’ve been forced to prioritise, not just because our income streams have been cut, not just because retailers have shut down partially or completely, but also because we have nowhere to go and nowhere to be seen wearing or using these things.
 
A lot of us are realising how much stuff we have, and how little of it we actually use. It is a profound revelation to understand that we can make do with less. Consumption is not a value, and over-consumption is not a crime, but if we can come out on the other side with the understanding of the effects of over-consumption on sustainability and the supply chain, as well as an inherent internalisation that we can be triggered more by needs, and less by whims, this would be very beneficial.
 
6 — The Way Too Generous Returns Policy?
Free online product returns is one of the key drivers to online customer conversions. A generous returns policy leads to more sales, but it also increases the number of returns. Currently, while the reverse logistics process is heavily impacted, some online retailers have made their returns policy even more generous. We have seen extensions to 90 days and more. When the shops reopen, these returns will flood the online retailer supply chain and warehouse.
 
What if the returns policy was re-imagined? Here’s an alternative we like: what if the consumer paid for returns to be collected from her house, but got free returns, if she returned the purchase locally?
 
7 — TMI: Data Proliferation
If there is one thing that grows all the time, it’s data. That’s not going to change. What can change is the way we handle it. A lot of data in the returns industry remains physical. We fill in shipping slips, returns labels, returns reasons, etc. Not only is the data not being processed properly, we are also not learning from it. Not really. We are not cross-checking returns across areas or consumers. We are not learning about returns on the level of the SKU or product line.
 
One thing we can do better is to digitise returns data — not just to be more sustainable and cost effective — but also to really gain from this activity and to learn more about what consumers like and don’t like. Data processing can be a value- added-activity and not an overwhelming headache.