The Return of the Returns
It seems that one of the direct consequences of the recent global lockdown as a result of the pandemic, has been the acceleration of the bridging between the digital divide of online retail and offline retail. If the general statistics prior to COVID-19 showed online retail purchases making up 10-12% of total retail purchases, now it seems that online purchasing is on the increase. It makes sense: what other options were available to us with the offline stores closed? Shoppers who hadn’t previously ventured into the realm of e-commerce, took their first steps with trepidation. The author of this blog can testify… my mother, who swore off such activities, found that she had no choice.
On the flip side of the increased online consumers, many retailers experienced a downward trend of returns. There’s no cause for celebration here. This is directly connected to the slow down — sometimes partial, sometimes complete — of the reverse logistics process. There was simply no way to make returns. The general answer of e-commerce retailers to this breakdown of the supply chain was to extend the returns policy. Which brings us to today: as the shops slowly re-open there is an anticipation of a flood of returns. Returns are back with a vengeance, and if the burgeoning number of online consumers continues to grow, it will be like returns on steroids…
So where does that leave online retailers? Mostly with a feeling of panic. Things are not back yet to any new kind of normal. The reverse logistics process isn’t fully recovered. The returns set to flood the supply chain consist of stock that may no longer be relevant or possible to resell (easily or for profit). Moreover, if in the past it has been difficult to predict how many returns will ensue following seasonal sales and special events like Black Friday, this issue will now be compounded — after all returns have been gathering dust in houses around the world not for a single day, but for several months.
As online retailers brace for returns we believe that the main way to mitigate this issue is to ensure a circular solution in which all online returns are dealt with locally. In the broadest possible vision we imagine a returns eco-system as an economic opportunity for innovative and environmentally aware business people. How would this work? Dealing with returns locally is advantageous for the following reasons:
Alleviation of the burden for the reverse logistics supply chain
The invariable flood can be channeled and directed intelligently to local partners for handling.
Lowering online retailer carbon footprint
Once the reverse logistics process is disrupted, carbon emissions are reduced as a result of the reduction of transportation. Not only this, but also consider reduced packaging and reduced wastage. This in an impactful victory worthy to celebrate.
Driving traffic into offline spots
Returns handled locally, provide increased opportunities for local business for revenue generation. It could also potentially create new business opportunities beyond the traditional “return spot concept.”
New business opportunities
Local returns handling offers real opportunities to businesses and partners with savoir faire related to retail at all stages of its life-cycle, including but not limited to:
In this manner, returns can be handled and routed in an intelligent and logical manner to the correct next mile in relation to the product’s stage in the life cycle. Is it in great condition? Resell it. Does it need a fix? Refurbish it, etc. These are business decisions that can enable true reverse logistics optimisation on the one hand, and on the other hand can assist in building a cohesive and significant bridge between online and offline retail.
Technology enablement for automated inspection
In a world where all returns are dealt with locally, new technology enablement, such as automatic inspection and validation of returns can provide a more efficient, accurate and near “contactless” returns handling process. The inspection of returns is traditionally a combination of manual inspection and automated scanning of labels done in the returns warehouse. Technological solutions are becoming available that can scan the item in its entirety in order to ensure its authenticity and re-sellable condition. This technology could also give the consumer the confidence and validation it needs to ensure that the purchase of a return is not the same as a second-hand or thrift store buy, but rather a genuine new item for an online brand being sold locally by an offline retailer.
A local solution for online product returns management enables the retail industry to catch a glimpse into a future wherein the returns are not a threat, but an opportunity. And a flood of returns is not an obstacle, it is the water that can nurture and grow an entire eco-system.
Returns are returning big time. Let it pour.