What to do with the returns?

The holiday season is now over and from all indications; it was a success for online retail. While all data has yet to be compiled, estimates show online retail sales increased 15% to 18%. Meanwhile, estimates suggest US in-store sales declined 7% to 10%, depending on source.

As online retail increases, so do returns. UPS coined January 6, as “National Returns Day” and anticipated to ship up to 800,000 returned items over a seven-day period including January 6. Furthermore, UPS is expanding its UPS Access Point network from Europe to the US to create alternative drop-off and pick-up points for packages. According to a company spokesperson, “We want to give everyone an access point within 10 minutes of their delivery address.”

FedEx is also getting into returns thanks to its acquisition of Genco, one of the most well-known reverse logistics companies in the US. According to Genco, it processes more than 600m returned items annually.

Returns are expensive for retailers – the cost of return shipping, labour costs for unpacking, processing and restocking goods, re-selling the item at a reduced price in-store or secondary market such as an outlet store or discount retailer.

According to Optoro, a company that helps retailers improve their reverse supply chain, 23% of all returns take place during the holiday season. The company’s Chief Executive estimates it to be about $60bn worth of goods.

$60bn worth of returned goods in just a short time period is a great opportunity for logistics providers. And, unsurprisingly, start-up companies are appearing to help in innovative ways.

Founded in 2008, Optoro uses its cloud-based system and takes returned and excess goods and sells them directly to consumers over a variety of platforms, such as eBay, Amazon, and Optoro’s site BLINQ.com. It uses either clients’ distribution centres or its own for companies that need it. In addition, Optoro’s real-time tracking system allows retailers to see where the goods are at every step of the way.

Return Logic is another returns-focused start-up. Operating since 2014 and according to its website, its solution includes:

  1. A physical returns process in which a percentage of returned products is intercepted and inspected by trained technicians.
  2. Rapid and robust analysis of returns data to rapidly detect trends and identify specific issues with individual SKUs.

And, lastly, a bit different but certainly an interesting company is Trunk Club. Nordstrom’s acquired this five year old Chicago based company in mid-2014. A personal styling service for men, it ships for free a box containing a selection of clothing and other items. Customers only pay for what they do not mail back within 10 days.

A focus on returns will increase for retailers as one way to manage costs in this highly competitive industry. Most traditional logistics providers offer returns solutions but in this new omnichannel environment, start-up companies are appearing to address these changing needs in creative ways.