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Supply chain braces for peak retail returns: How companies should prepare

ReverseLogix executive emphasizes importance of a return management system

Photo: Jim Allen/FreightWaves

As e-commerce accelerates, so does its historically neglected underbelly: returns. In 2020 alone, U.S. consumers returned nearly $102 billion of goods to online retailers, a figure that doubled over the course of 12 months. EMarketer predicts a 13.7% jump in U.S. online purchases for 2021, and if approximately 30% of all items ordered online are returned, third-party logistics providers and shippers need to up their returns management game. 

“Consumer buying behavior has changed,” said Gaurav Saran, CEO of ReverseLogix, a leading returns management platform. “People are not only shopping for what they need, they’re buying more sizes and returning more often. On top of that, consider the pressure on the global supply chain today: the staffing difficulties for transportation and warehousing, global shipping shortages and a peak retail season just around the corner. To handle returns more efficiently, ReverseLogix is focused on helping enterprise organizations utilize a centralized returns management system (RMS).”

Historically, returns have been largely underserved from a technology and innovation standpoint. 3PLs and shippers often depend on spreadsheets and warehouse management systems, but with the imminent peak-season increase of return volumes on top of a brittle supply chain, 3PLs and shippers may struggle to brace for and process those returns, which can significantly threaten the bottom line. Returning an item can be more expensive than the item’s value, so gaining efficiency in this process is becoming more urgent. 

“The nuances are so much greater for the return,” Saran said. “You have to open the item, inspect it, grade it and do some level of disposition to it. If it’s an electronic item, it requires different ways of grading and inspection versus an apparel line. Before the tsunami of peak season hits, 3PLs and shippers must be prepared with an end-to-end returns management platform that is able to optimize the returns process.” 

ReverseLogix’s cloud-based RMS uses automation, analytics and visibility to create a more intelligent returns process. Shippers and 3PLs are able to see incoming return volumes in the system, allowing them to plan ahead for labor. Once the item arrives, the system is able to optimize the experience for both the consumer and the brand. 

“Our system is smart enough to help make determinations, where you’re optimizing the returns process with the customer, while keeping in line with your network,” added Saran. “If you’re returning from Nashville, Tennessee, if we know that a return network warehouse is closer to you, we have the return go there automatically instead of sending the item across the country.”

With an automated system that quickly and intuitively manages returns, warehouses that face labor shortages can more strategically utilize their employees. ReverseLogix’s RMS can easily plug and play into an existing warehouse management system, ERP or transportation management system, which improves the training time for seasonal or permanent employees, helping to ensure their retention. 

“3PLs that offer the end-to-end returns experience for their brands ⁠— something that all brands struggle with ⁠— will differentiate themselves as a one-stop shop,” said Saran. “It creates incremental value for 3PLs to be able to offer a return solution, because if you’re offering all the brands access to the portal, you haven’t even touched a product yet. It’s pure revenue for you. On top of that, you’re also giving a better experience to your brand and your customers, and you’re minimizing the returns impact with better visibility.”

While many 3PLs and shippers have point solutions that allow them to create a return, it’s not an end-to-end customizable solution like an RMS that can handle both B2B and B2C transactions. 

“There aren’t a lot of true RMSes in the market today,” he said. “By ignoring the inefficiencies of returns, it could actually hurt a 3PL’s forward business because shippers will see that you’re not able to handle the returns properly, while they’re getting hit on all sides.”

Corrie White

Corrie is fascinated how the supply chain is simultaneously ubiquitous and invisible. She covers freight technology, cross-border freight and the effects of consumer behavior on the freight industry. Alongside writing about transportation, her poetry has been published widely in literary magazines. She holds degrees in English and Creative Writing from UNC Chapel Hill and UNC Greensboro.