Reuters Events | Supply Chain & Logistics Business Intelligence

‘Re-commerce’ and a renewed focus on how to make returns work are key in the wake of COVID-19 says panel of supply chain leaders

As in physics, an action almost always a reaction within supply chains. With e-commerce on steroids, that reaction has been a rise in returns.

Handling this load is no easy task, especially as e-commerce margins are all too often razor thin. Supply chain experts came together in a Reuters Events: Supply Chain roundtable to thrash out how they are handling the sudden surge in returns in a smart and sustainable manner.

The first thing to address is the surge in levels of e-commerce and therefore returns. “I've seen massive demand,” said Jeff Davidson, Senior Operations Executive for Microsoft’s Global Devices Operations and Supply Chain, with “workloads that were about four times above average.”

We have specific facilities within our network that are dedicated to a more centralised returns process

This heightened environment means that companies need to be thinking about one key word when it comes to the circular process of e-commerce and returns: Streamlining.

This can stretch across a variety of different forms, but for every brand it is worth taking this moment to stand back and ask how they can do things differently.

Fortunately for consumer retail brand Lowe’s, “We had actually just started to stand-up a different type of returns network prior to all this happening,” said Ellen Mark, the company’s Senior Director of Supply Chain Strategy.

The next step for me in terms of returns specifically is starting to think about how do we simplify that experience for the customer even further?

This came from evaluating their returns system and understanding how to cut the fat to reduce waste and improve efficiencies.  

Now, “We have specific facilities within our network that are dedicated to a more centralised returns process. We have a hallway program,” so now returns “go back through this centralised return-to-vendor network and so that's been a win. There are some kinks still being worked out as I understand it, but we were fortunate to be in a position to have that kind of in-flight.

“The next step for me in terms of returns specifically is starting to think about how do we simplify that experience for the customer even further?” said Mark. “Because our legacy is a brick-and-mortar company at Lowe's, it has meant that a lot of times returns mean a customer coming back to the store and dropping something off to return it,” which obviously comes with risks to those individual and staff at this time, as well as leading to a lack of standard processes, affecting their ability to return goods into the sales stream.  

How do we make the online low-touch experience of returns simpler? Whether that's lockers or curbside type drop off, whether it's pickup from home

For Kelly Halloran Supply Chain Director at DKB, they are also “Looking at that. Because we have multiple different brands, we have multiple different warranty timelines, and we're looking at ways to streamline that and make it into as few touchpoints possible. Instead of [customers] calling in, they're handling it all online and setting up different channels to handle the different brands.”

Lowe’s is thinking about “How do we make the online low-touch experience of returns simpler? Whether that's lockers or curbside type drop off, whether it's pickup from home – something like that.”

It’s not just customers that want to have options closer to home either.

Now, we're seeing a real demand for what can you process that in country? Can you open the box? Can you inspect it? Can you grade it? Can you put it into local inventory or is not good enough for that? Can you put it through a different channel with a merchant or a third-party channel? Can you even dispose of it?

“What we've seen, really across geographies, is that merchant retailers, sellers, they want returns dealt with much closer to where the customers return them from,” explained Davidson. “Typically, the model’s been you send something out across the world, and the something is either return-to-sender or an unwanted return, and it goes all the way back. Now, we're seeing a real demand for what can you process that in country? Can you open the box? Can you inspect it? Can you grade it? Can you put it into local inventory or is not good enough for that? Can you put it through a different channel with a merchant or a third-party channel? Can you even dispose of it? I think that's partly from COVID, but it was already happening. There's a whole sustainability angle” that is rapidly developing noted Davidson. “People now want returns dealt with in a different way.”

Mark agreed that the pause in business has allowed sustainability to “take on a whole life of its own during COVID.

I think re-commerce is going to be a trend that's not going to go away

“It's actually an area that I think we have a lot of opportunity to explore. At the beginning of this year, we started talking about how are we really going to lean in more on our supply chain sustainability efforts, and make sure that if we want to be a leading supply chain that becomes really one of our core tenets.”

Part of this will be the optimisation of the reselling process or ‘re-commerce’ as it is increasingly being called. “I think re-commerce is going to be a trend that's not going to go away,” believes Brian Bourke, Chief Growth Officer of SEKO Logistics.

Coming back to the theme of streamlining, Microsoft are taking an innovative approach that will mean an improved returns process across all of the above points powered by Artificial Intelligence (AI). “We created this optical image recognition that would work with AI and trained it to really look at a product, identify the product, identify the condition,” and convert that information into whether that product could be put back out to market, helping sustainability and the bottom line. Although it’s early days, where “We've just spent time training the AI, with a human beside it” and it’s not yet ready for widespread deployment, “the speed which we can get those returns back through and the accuracy of how we identify product and the disposition really went up,” in initial tests said Davidson.

We are therefore seeing the emergence of a new approach to returns as a result of COVID, one that uses sustainable and customer-centric principles to reduce touchpoints, streamline processes and capably identify the viability of products for resale close the point of return.