Return to Sender
By Jan 5, 2015 oncomments powered by Disqus
This is the final post in the “Retailers, Supply Chains and the Holiday Season” blog post series and it addresses one of the most difficult parts of the supply chain that retailers have to deal with each holiday season – returns.
An article from the Wall Street Journal offers some interesting data surrounding returns:
According to Optoro, more than 20% of returns happen during the holiday season—about $60 billion in merchandise.
Furthermore, Optoro estimates retailers see a 5% to 10% return rate on in-store purchases. For online purchases it’s typically 10% to 15% and for apparel brands, the online return rate can be much higher, in many cases closer to 20% to 30%.
The U.S. Postal Service handled 3.2 million returns in the two weeks that followed the 2013 Christmas season.
United Parcel Service Inc. expects to handle four million returns the first full week of January, up 15% from two years ago as online sales continue to grow.
Returns are expensive for retailers. As noted in a previous post, “Supply Chain to the Rescue for Best Buy”, on average returns cost Best Buy $400 million.
How to handle this meddlesome problem? Evidently in a number of ways…Companies such as Overstock.com initially sold surplus and returned merchandise on an online e-commerce marketplace. In recent years it has expanded to sell new merchandise, as well.
For FedEx, it went out and bought one of the best known reverse logistics management companies, Genco. Meanwhile, others, such as Best Buy, build an online marketplace and resell returns that are determined resalable.
Optoro, an IT company based in Washington DC, helps retailers and manufacturers manage and sell returns and excess inventory. Optoro’s cloud-based system takes those 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. While most clients have their own distribution centers, although Optoro has one for companies that need it. Retailers also can see where the goods are at every step of the way.
And, in India, Reverse Logistics Corps, which operates GreenDust.com, is planning to expand its global footprint by entering Africa, South Asia and CIS. It has already started a pilot in Dubai, the U.S., and Hong Kong. “Returns and refurbished market are a $500-billion opportunity worldwide, and we want to be the Alibaba of this space,” said GreenDust founder and CEO Hitendra Chaturvedi. Founded in 2008, GreenDust refurbishes damaged or defective products and sells through its online channel and offline franchisee. The company sells products under three categories such as end of life products, factory seconds and refurbished products at a discounted price. The company had recently partnered e-commerce companies such as Flipkart, Snapdeal and Amazon to manage their reverse supply chain.
So, as noted above, there are numerous ways in which to handle returns. To find out more about this topic, topics in previous blog posts in this series and more, be sure to check out Ti’s upcoming report, Global Ecommerce Logistics scheduled for publication in January.