ISSUE 02 | SECTOR PROFILE

Many Unhappy Returns

As customers increasingly send back unwanted purchases, ingenious advances in reverse logistics are coming to the rescue.

By Timandra Harkness | Illustration by Angela Hart

reverse-logistics

Part of the appeal of shopping online is precisely being able to try things on at leisure and to return unwanted items. Nearly a third of goods bought online now make the return journey. “One fashion retailer admitted to me that their biggest supplier to their warehouse is themselves with returns,” says Andy Gulliford, chief operating officer at SEGRO. 

Of course, fickle shoppers are blissfully unaware of the challenges they present to their favourite brands. “What retailers want most of all is to make sure that customers have a great experience,” says Emma Clark of ACS Reverse Logistics. So collecting the unwanted item is a relatively happy ending to the shopper’s story. But for the retailer, it’s just the beginning of a logistics journey that costs the retail sector £60bn per year. 

For starters, where do you take it? 

To date, returns have been schlepped back to the retailer’s warehouse. Typically, a mezzanine space might be added “to keep returns out of the flow of the general warehouse”, says Gulliford. 

But increasingly, retailers are turning to specialist third party logistics companies such as ACS Reverse Logistics, iForce and Clipper Logistics. Their Centralised Return Centres, “give retailers back-space, time and money”, as Clark puts it. Instead of clogging up outbound warehouses, returned goods from multiple retailers are sorted in one dedicated space. Then, whether it’s picked up by the manufacturer, returned to the retailer, or sent onward to a third node, it’s a single journey instead of collection from many sites.

“One fashion retailer admitted to me that their biggest supplier to their warehouse is themselves with returns.”

Retailers tend to rely on a single return centre in the middle of the country, but Gulliford predicts the arrival of local warehouses which just handle returns from shoppers in that area, and put them back onto the market locally. “That’s where we see the future,” he says.

Which brings us to Asset Recovery. Because it’s not a simple matter of sending your outfit back to reappear on the same retailer’s shelf it left a week ago. Even if it’s still pristine, by the time it’s been inspected, repacked and rebadged, it may be last season’s style, or too low margin to be worth the cost of that processing. But nobody wants to just chuck it away.

Most brands and retailers are careful about where their stock might end up. Seeing the same thing on sale cheaper, or in a more downmarket store, might erode the value of the brand. Some even specify that rejected goods can only be sold in different parts of the world, which means finding reputable traders to ship them abroad. The same kind of tagging and tracking that got a commodity through the supply chain into the customer’s hands originally, can now help to get it back on sale fast.

Luckily, there is a market for returned goods. Discount remaindered stores, brands’ own eBay stores, or specialist dealers welcome them. Online auctions devoted to returned and surplus goods get yesterday’s rejects in front of tomorrow’s customers. “If you can sell it somewhere, it helps you recoup some of the cost,” says Clark. “It’s ethical, it’s sustainable and it’s not going into landfill.” Hand-inhand with these solutions, the industry is trialling ever-more inventive ways of turning returns into an opportunity. And that is where the future lies for reverse logistics.

Californian FinTech start-up Returnly wants to streamline the process of getting refunds to customers. Instead of waiting till their purchase is returned, customers can have the price instantly refunded to a virtual wallet. But that credit note can only be spent with the same retailer. “Asking shoppers to wait for a return to be processed before they’re refunded is just a bad shopping experience,” says founder Eduardo Vilar. “We empower brands to offer a better returns experience, turning returners into hyper-loyal shoppers and lost sales into repurchases.” Or what self-described compulsive online shopper Alex calls a “gateway drug”.

ASOS customers with the ASOS app can order goods to their home, try them, and only pay for what they keep – at no extra cost. Previously, shoppers who wanted to try things before deciding which to keep had to fork out for all of them and return the unwanted items to get a refund. Now, shoppers don’t have cash missing from their account while a return is processed.

“Asking shoppers to wait for a return to be processed before they’re refunded is just a bad shopping experience...”

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