In times of crisis, look for opportunity. Navjit Bhasin's article in Mass Market Retailers (MMR) shares how technology and data can reduce returns.
Mass Market Retailers (MMR), August 7, 2023
Returns are a touchy subject. When a famous and well-loved retailer, known for its iconic footwear, flannel products and liberal return policies, announced a few years back that it was tightening returns policies, it attracted considerable media attention. The media coverage was primarily negative, and upset consumers lambasted the retailer on social media.
Despite the pressure and brand hit, the retailer kept to its plans and explained how much money it costs to handle returns. Eventually, the backlash died out among social media followers, and a general feeling of “we are upset, but we get it” prevailed. This experience shows how sensitive every retail stakeholder is towards returns.
In times of crisis, look for opportunity. This famous line, paraphrased from a speech by President John F. Kennedy, can be applied to the retail industry and the issue of returns.
According to the National Retail Federation, $816 billion of merchandise was returned in 2022. Despite the recent attention, generous product returns policies have always been prevalent in retail, especially in the apparel, footwear and soft goods categories. Changing policies and boosting return efficiencies are band-aid solutions that ignore the core problem: The return volume must be lowered.
When confronted with returns, most people gravitate towards the management of returns rather than their reduction. That’s because the returns process kicks into gear when a consumer no longer wants a product. Like theft, breakage and other forms of shrink, returns are considered a cost that can be contained by optimizing returns management or reverse logistics.
As with any process, optimizing returns management occurs by throwing more money, expertise and technology at it. Yet, the underlying approaches are the same:
• Pull cost from the reverse logistics process.
• Find creative ways to pass costs on to consumers.
• Create new methods to re-commerce the returns.
• Convince both consumers and retailers that returns benefit the shopping and brand experience.
While practical in preventing consumer revolt and chaos, there are sounder approaches to retail’s near trillion-dollar return problem.
Trying to fix the returns problem after the consumer has decided to return an item is counter intuitive. Only so much cost can be contained, only some things can be resold, and no matter how anyone spins it, consumers would rather not have to return anything. In short, the only stakeholders that benefit from the sale-return cycle are the companies that manage the logistics of returns.
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