Purchase returns and the reverse logistics portion of last-mile delivery have become a focal point as more consumers settle into the lifestyles and purchasing habits that have become the new norm in a COVID world.
Consumers’ acceptance of a digital retail channel has provided salvation to many retailers that have seen pandemic-related shutdowns choke off traditional in-store buying. At the FreightWaves Last Mile Logistics Summit on Thursday, Tony Sciarrotta, executive director, Reverse Logistics Association, and Nicholas Isasi, executive VP, DM Transportation Management Services, chatted about some of the issues and best practices used in reverse logistics and processing purchase returns.
Isasi said e-commerce demand, namely outbound direct to consumer, is very high right now. Some of his clients have indicated that they are operating “above Christmas levels,” which means “the returns have grown exponentially as well.”
DM Transportation is a full-service logistics management company providing inbound, outbound and drop ship services through its web-based transportation management system. The company specializes in hauling large items and shipments with weights that exceed many parcel carriers’ maximum limitations, like appliances, furniture, mattresses and kayaks.
One of the biggest concerns has been the return of larger items, for which the cost to transport can equal as much as half the purchase price. Isasi said DM Transportation works with its clients to find other solutions for returned merchandise, which can include donating, recycling and liquidating those items locally. The local disposal of the product often generates a better return than shipping the item back to a retailer’s facility, which requires incremental transportation and handling costs.
In some instances, the company provides a forward-stocking option, where it can sell the product into the local market direct from a DM Transportation facility. Isasi said the items that come back to DM Transportation’s facilities are inventoried, with their employees assessing the condition of the product. This allows DM Transportation to determine which products are economically viable, like items with scratches and dents, and what needs to be disposed of locally. DM Transportation uses local partners to facilitate the liquidation process as needed.
The total value of merchandise returns surpassed $1 trillion in 2019, with North America holding roughly one-third of the share, according to Statista.
Sciarrotta said returns on e-commerce purchases are two to three times the numbers seen when compared to in-store buying, pointing to “bracket” purchasing, or ordering multiple sizes, of apparel and shoes where the customer returns as much as two-thirds of the original delivery. He believes one of the biggest hurdles is meeting customer expectation levels, which he noted have moved higher over the past 10 years in part due to the success of Amazon.com’s (NASDAQ: AMZN) platform.
“Returns aren’t driven by things that are broken as much as things just went wrong about delivering to that customer’s expectations,” Sciarrotta said.
Isasi views the returns experience as just as important as the delivery experience. He said pre-planning the delivery of large, bulky items is key. However, they have the ability to remedy on-site issues like appliance deliveries that won’t fit into a home. The delivery team will work with the retailer’s customer service department and the consumer to map the best resolution while still at the delivery location.
He said speed is everything. “If you receive a couch and you know you don’t want it, what you don’t want is that couch in your house for a week, for 10 days, for two weeks.” He said the speed and ease with which picking up unwanted items occurs is something a consumer will remember, good or bad. If the returns process goes well, consumers are more likely to purchase from the same vendor again.
The Reverse Logistics Association is a global trade association for best practices in the reverse and returns industry with a member list that includes retailers, manufacturers and third-party providers.