January 2017 | Commentary | Reverse Logistics

Rethinking Reverse Logistics for Online Apparel Returns

Tags: Reverse Logistics, Retail, E-commerce, Logistics, Supply Chain

Howard Rosenberg is CEO and Co-Founder, B-Stock Solutions, 310-686-7773

As virtual shopping bags replace physical ones, it's important for retailers to update their policies and logistics strategies to align with consumer behavior and expectations.

This is particularly the case when deciding how to handle apparel returns, which boast one of the highest return rates: One in three purchases are sent back.

This trend, and the growing cost associated with it, creates a new urgency for e-retailers to rethink their reverse logistics processes. This includes what happens to the merchandise that cannot be returned to virtual shelves and is slated for liquidation on the secondary market.

Expediting Recovery Through Technology

Technology is revolutionizing the way organizations liquidate their returned or excess merchandise. A web-based solution makes it possible to have thousands of buyers compete for the inventory, pushing prices up versus one or two liquidators negotiating them down offline.

Some of the world's largest apparel retailers and e-retailers use technology in the form of customized business-to-business (B2B) online auction liquidation marketplaces to sell inventory directly to business buyers across the globe, increasing recovery by 30 to 80 percent. This type of technology platform helps deliver the highest possible price, automate the sale process, establish a faster sales cycle, and generate proprietary market intelligence in the form of real data on market prices.

When it comes to a B2B marketplace for your customer returns and excess inventory, knowing how to best assemble inventory—as well as how to target, drive, and sustain the right buyers—will substantially increase recovery and efficiency.

Here are some tips:

  • Segment buyers by apparel type, condition, and lot size to better drive demand.
  • More bidder competition among the right buyers will mean higher prices every time, so investing in attracting new buyers is critical.
  • Repeat buyers can result in a triple-digit percentage increase in recovery rates. This is particularly the case with secondary market apparel buyers.
  • How auction lots are assembled is extremely important, so consider segmenting by commodity category or original MSRP per item. Even the time of year can make a difference.

    Have Knowledgeable Leaders in Place

    While it's clear that a technology-based B2B liquidation program will automate the sales process, keep in mind that to achieve optimal results proactive management is critical and requires a dedicated and experienced team to manage it well. Leveraging expert knowledge will provide the most effective outcome.

    Given that e-commerce returns are projected to grow 15 percent annually and apparel is the second-largest e-commerce market, there is no denying that high apparel return rates will be the new normal across the e-retail landscape.