Holiday Clean Up: Managing the World of Warehouse Returns

After winter comes mud season. After holiday shopping and shipping come returns. And, yes, the two are connected. Returns are the muddiest part of the entire supply chain.

Unfortunately, nobody wants to be involved with returns. Distribution centers are built to pick and ship orders not receive and restock returns. Just for the record – returns are not shipments backwards. Anything but. Unfortunately, the shipping mindset typically gets in the way of effectively managing returns. And then inertia takes over.

However, there’s real margin and customer satisfaction sitting in that pile of returns in the corner over there. And right now is probably peak season for returns.

While today may not be the best time to begin developing a new returns process, it is the best time to resolve to do just that. Maximum pain typically focuses the mind.

Here are some numbers to keep in mind.

Brick-and-mortar stores typically generate return rates of 10% or less. For e-commerce, that number triples. It’s just the nature of the beast. In fact, returns are generally considered an integral part of the e-commerce transaction process. CBRE reports the total value of e-commerce returns this holiday season could reach $41.6 billion.

That said, a recent survey by XPO and Goodmind indicates that a company’s returns policy is a strong determiner of 86% of consumer buying decisions.

And if you’re not a numbers person, make this personal. How do you react as a consumer to the whole returns process? You probably expect to be able to return any item in a reasonable amount of time for nearly immediate credit to your card. Right?

So where do you start? A clear returns policy is a good place. Key words here are customer friendly, clear and easy-to-follow. That should get you pointed in the right direction.

And direction in returns matters. In other words, it is not just another DC process. It is a strategy. And that requires time, effort, clarity and support from the top.

Then there’s the matter of responsibility. Did you just squirm when you read that? Fact is no one is interested here. And so there are may different opinions as to who owns returns. Is it the DC manager? Head of merchandising? CFO? COO? CEO?

Whoever gets the nod at your DC needs help from all those departments and people to be successful. Managing returns is not a silo. It cuts across many different segments of the company. Quite simply, returns have many different aspects to them ranging from margin to resale to restocking and beyond.

Then there’s the matter of how you physically handle returns. While it seems like an ideal spot for extensive automation, that’s not the case.

For instance, Sure Sort might be an ideal way to manage final sortation for restocking of returns. But to get to that point, there’s already been plenty of time-consuming hand work and human judgment in
assessing the item and determining its proper disposition. After all, there are some returns that simply can’t be restocked and are headed for salvage.

If you were looking for a project for 2020. Returns is it. Good luck. You will need it.

Do you want to keep reading more about warehouse returns? Check out 3 Tips for Getting Reverse Logistics Right.

Gary Forger is the former editor of Modern Materials Handling magazine and the Material Handling & Logistics U.S. Roadmap to 2030.

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