Mitigating the Flood of Post-Holiday Returns
Businesses across the country spend months gearing up for the holiday season. And while they survived this year’s frenzy, many are now bracing for a flood of post-holiday returns.
The return process can be challenging, and often requires customized, manual, and labor-intensive handling and sorting practices. If returns can be added back to salable inventory, they can still entail costly transportation to stores or fulfillment centers. Speed is critical in processing returns given seasonal products and other short shelf life SKUs quickly becoming obsolete. And issuing refunds early in the process can make or break the customer experience.
For the seller, some items such as bulk products or furniture don’t make economic sense to return. Some items can’t be resold or are too inconvenient to recoup costs, forcing businesses to consider packaging returns in bulk for resale, reimbursing customers without accepting the returned item, or in worst-case scenarios, sending products to landfills.
The good news? Innovative supply-side strategies can be used to develop solutions for a frictionless return process. It’s the final experience a customer will have in the retail process, and it’s critical.
Here’s what to consider when optimizing your returns process:
- Proximity to customers. Success increasingly depends on utilizing an optimized distribution network with multiple distribution centers, warehouses, or fulfillment locations in populous urban areas. Though rents for logistics space continued to climb in the past year, many find the cost worthwhile after considering all operating costs.
- Labor is one of the most costly and competitive elements in a supply chain. Since returns are unique and unpredictable, a high volume of labor with specialized training is required, and companies must ensure facilities have an adequate labor supply.
- Return channels. Evaluate your existing resources and plan accordingly. Some items may be best suited for a sorting facility, while others should be handled at a large distribution center or manufacturer. Some companies use third parties to efficiently process specialty returns such as electronics, even by leading retailers. Repackaging returns and reducing waste will also become a larger issue; one option is to process returns off site from core business operations, but in close proximity to existing facilities.
- Buy online, return in store. For businesses with an extensive retail footprint, streamlining in-store returns can be an efficient option that reduces transportation costs and draws in new and old customers. Some retailers, including Nordstrom, are beginning to accept returns from rivals like Macy’s and Kohl’s to reduce costs and increase convenience.
- Space sharing. Many businesses seek partnerships with traditional brick-and-mortar retailers to expand their physical footprint. This year, UPS added 12,000 pickup locations in well-known brick-and-mortar retailers for a total of 21,000 pickup points across the United States.
Customizing the Approach
A clear and efficient return process can differentiate businesses from competitors and reduce supply chain costs. While the businesses that planned ahead this year will likely end up on top, every business can learn from their post-holiday season and better optimize reverse logistics ahead of 2021.