Seth Marks, chief merchandising officer with Channel Control Merchants, details the major issues that logistics providers are facing as they deal with increasing volumes of returned products.
The growing volume of product returns, especially within the e-commerce channel, is a problem of increasing concern. Last year, returns accounted for some $741 billion of retail value, says Marks, noting that “if that was a Fortune 500 company, it would be significantly larger than Walmart.”
Most retailers to date haven’t paid enough attention to the problem of returns. “The supply chain is usually offense, offense, forward, forward,” Marks says. “On the reverse side, it’s very unclear where this product goes.”
Decisions, nevertheless, must be made. On top of deciding whether a given returned product can be reused, resold, repaired, recycled or scrapped, companies now must take into account the need for sustainability. Marks calls it “an off-the-radar dark hole” on which light is finally being shined.
The newfound emphasis on greener supply chains “is fantastic for the environment,” he stresses. “There’s been a tremendous amount of waste product being put in landfills, with unnecessary carbon emissions taking place when there’s four more places [a product] needs to go.”
In e-commerce, the scale of the problem is immense. Depending on the category, the dotcom return rate can be two four times higher for online purchases than for those bought in physical stores. The rate is especially high for apparel, with buyers “bracketing” a purchase by ordering multiple sizes or styles of an item, then returning what doesn’t fit. But it’s also a major issue in larger goods, such as furniture and other home products.
All of this is causing huge backups in warehouses, with returned goods “eating up productive space,” Marks says.
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