The Retail Reverse Logistics Reckoning: Brands Cast Eyes to Returns Amid the E-Commerce Swell

As a long-time supply chain professional, it was humbling and exciting to watch the revolutions that took place amid the huge shift in consumerism over the past 18 months.

Unfortunately, the circumstances were dire and distressing. But the agility, the innovation, the resiliency that consumer-facing brands showed in finding new ways to serve their customers truly kept society moving. These innovations offered mechanisms for consumers to secure the products they needed and wanted, and they kept businesses from going belly up.

As all supply chain professionals know, those end-point sales carry huge tails through the business world that keep manufacturers running, create jobs at every stop along the way, and underpin large swaths of the U.S. economy.

The changes we experienced — like click-and-collect, buy and pick up, buy and ship to store, to name a few — reshaped the way we buy goods in America and the way buyers interact and interface with sellers, likely forever.

And, of course, the tsunami of e-commerce buying caused massive, unexpected shifts in how consumers purchase products, how businesses route their distribution networks, and when and where end users receive them.

Now, however, brands and retailers, as well as consumers, are starting to reckon with the other side of that coin: What the heck do we do with the massive amount of returns?

While retailers and the supply chain focused on getting goods to consumers over the past 18 months, so-called reverse logistics — i.e., getting products back from consumers via returns — is a burgeoning and pressing issue, and it’s created a myriad of questions.

As consumers, do you take returns back to a local store? Do you put them in the mail? Do you have to take them to a local pack-and-ship facility?

For brands and retailers, the questions are even more complex. What do they do with dispositioned inventory? How do they make returns simple and straightforward for their customers? How do they push returns back into the system and recreate that inventory?

Today, returns in large part are disruptive to retailers’ networks. There’s no real process at the local level to inspect items and ensure they’re properly dealt with. They create a lag in inventory. They create piles of working capital that are just sitting there, out of play.

Perhaps most importantly, the returns process can build resentment by consumers toward brands that don’t make it simple. For example, I had a conversation recently with someone who told me they’ve simply “Had to take a few Ls” (that’s losses) on certain purchases that didn’t fit, didn’t work, or simply weren’t wanted any longer — all because the returns process was too burdensome or too complicated.

That’s not exactly a good strategy for building brand loyalty or serving your customers.

Increasingly, this issue is one retailers and the supply chain at large will need to manage and integrate into their set of solutions surrounding shifting consumer habits. E-commerce demand is off the charts from a volume perspective. Demand quadrupled last peak season from the year prior and it’s expected to double again this year.

That’s an absolute looming buying boom, but it’s also a looming returns boom that retailers will need to manage.

The secrets to solving the returned puzzle lie in a few key areas.

One, micro-fulfillment centers at the local level, which brands have built over the past year as part of their new fulfillment processes, can easily be leveraged as returns centers. These are physically close to consumers, and consumers likely already are familiar with them — especially if that’s where they picked up an online order. It’s simply an easier way for consumers to engage with a brand for a return.

Using micro-fulfillment centers as returns centers can also help retailers manage returning inventories, thus avoiding that aforementioned lag time in restocking — and the dreaded piling up of returns.

Secondly, like many other aspects of the supply chain currently under upgrade, let’s look to technology to help tackle the returns process. Sophisticated robotics, artificial intelligence, machine learning ... these can all be put to use to fortify distribution networks, track and document returns, and help retailers manage their inventory based on today’s buying and returns habits, not yesterday’s.

Retailers are already using these types of technologies on the front side of buying and logistics. It’s simply a matter of transitioning them for use on the reverse logistics component of the e-commerce revolution and integrating them into retailers’ existing systems.

With these mechanisms in place — technology and leverage of existing local fulfillment centers — the industry can fill this void in the e-commerce explosion and better connect with and serve its customers. That’s a win-win for everyone involved.

Jeff Cashman is the chief operating officer at GreyOrange, a global company that modernizes order fulfillment through artificial intelligence-driven software and AI-driven mobile robots built together so they cooperate in deciding on and executing warehouse activities that maximize payoffs and minimize tradeoffs to create the highest yield.