Among the usual terms sprinkled into discussions of a supply chain industry in flux on the first day of Home Delivery World in Philadelphia, Aug. 31 — including partnerships, forecasting and excess inventory — ideas about how to more efficiently “re-commerce” returned goods into the supply chain seemed the most fresh and fruitful.
By now everyone in the business is well aware that the huge pandemic-driven boost in e-commerce has brought with it a painful counterpoint: massively increased returns. Online sales accounted for roughly 23% of the $4.583 trillion of total U.S. retail sales in 2021, according to National Retail Federation, and 16.6% of that got returned — a jump from an average return rate of 10.6% in 2020.
It doesn’t help that so many goods sold in the U.S. originate with sellers in China, even if that fact is invisible to the consumer because they’re buying through third parties such as Amazon or Etsy. “Returns to China are very costly,” said Brian Bourke, Chief Growth Officer at SEKO Logistics at a keynote presentation, “The Future of Last-Mile Delivery.” Bourke pointed to companies such as FloorFound that are tackling the particularly tricky problem of returns of big and bulky items such as furniture. If these can be processed for “re-commerce” by identifying opportunities to sell and deliver returned items more locally, the benefits include saving money, cutting waste and increasing sustainability.
Read more: Tech Aims to Minimize Soaring Cost of E-Commerce Returns
Re-commercing is set to grow in importance as retailers in the U.S. and other major markets face the unpalatable fact that they over-estimated demand for multiple product lines such as appliances and home-improvement supplies, and are stuck with a giant glut of inventory. There was an “epic disaster in forecasting,” during the COVID-19 pandemic, said Peter Goodman, Global Economics Correspondent for The New York Times, during a panel discussion, “How America’s biggest brands are tackling the supply chain crisis with sustainability & science.” As a consequence, many goods might not even make it into primary sales channels, let alone get returned. It’s increasingly unacceptable for those to end up in landfill.
Further, shifts in consumer consciousness mean that retailers are under pressure to account for how goods and materials get re-absorbed into the global supply chain. “People are paying attention to a company’s carbon footprint and other sustainability metrics,” said Farzin Shadpour, VP & MD of Supply Chain at Plug and Play LLC, an online platform that aims to connect early-stage investors, startups, and the world’s largest corporations. “Consumers want to know not just how what they buy is sourced, how it’s delivered, how it’s packaged, but also what will happen to it after they’ve used it.”
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