However, prevention is the best experience for everyone.” “Let’s face it, returns costs are built into the current profit model for e-commerce. And that the consumer can buy it with confidence upfront,” adds Schechter. “For instance, a shoe brand wants its customers to know that its size 11 always fits the same way. Retailers are “trying to delight customers with e-commerce” by providing a consistent product they know will fill their needs at the time of purchase, he says. But that doesn’t mean that retailers are disinterested in reducing returns, explains Jon Schechter, business development manager at AutoStore.
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“Hassle-free, free returns are nearly as important as free shipping,” says Dematic’s Hasman. It’s also worth noting that consumers consider returns to be a given in the retail experience. In the returns world, an item of clothing should be considered as perishable as a food item.” “The objective is always to get the returned items ready for resale as quickly as possible. “But ultimately, labor, accuracy and order turnaround time are the top priorities in processing returns,” adds Nathan. Some operations expect that cycle to be completed in a few hours while others work on a timeline of days, says Nathan.Ĭontrol and discipline are the two essential elements that automation, such as bots running on a storage grid structure, bring to reverse logistics. At least, those are the most common general classifications for the disposition of returned items.Īll of those steps take time. Some can be returned immediately to stock, others need some attention before returning to stock, some are sold to a reseller, and the most damaged of the bunch are consigned to scrap. Then they need to be reviewed and reclassified. After all, the reverse logistics process has several steps. “Ultimately, automated reverse logistics handling is a function of volume.”Īnother critical factor is the expected turnaround time for processing returns.
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“While there is no black-and-white answer, the generally recognized dividing line between manual and automation is a volume of 4,000 to 5,000 units an hour,” explains Krish Nathan, CEO of SDI. Nevertheless, a range of automated systems that move, store and sort returns are making their play where it makes sense. In fact, it’s impossible at this point to entirely remove people from the returns handling process. Automation is not the de facto answer for all reverse logistics operations. “For reverse logistics, the issue is no longer if, but when automation will move into the primary position,” he adds. “The longer companies stay with manual processes, the more painful the move to automation will be,” says McVaugh. Furthermore, labor continues to be a problem. Increased volume requires increased speed of processing returns, and automation is just faster than manual operations, says McVaugh. He cites several factors beyond the increasing number of returns as e-commerce grows.
“Automation in reverse logistics is not just a trend, it’s a reality,” explains Monty McVaugh, OPEX’s manager of the product management group. But manual processing is in the early stages of turning to automation, according to industry experts interviewed for this article. That said, many reverse logistics operations remain primarily manual, notes Chris Rowland, director of solutions consulting at Honeywell Intelligrated. With that in mind, reverse logistics should rank higher on the list of to-dos than cleaning out the cellar or reorganizing the garage. “The sheer magnitude of returns, especially in e-commerce, has been so enormous in the past 18 months that reverse logistics practices have not generally caught up with the increased volumes yet,” says Tony Hasman, principal consultant at Dematic.įurthermore, nearly 30% of consumers deliberately over order, and 19% of consumers order multiple styles, says Barclaycard Research. And with a more than 40% increase in e-commerce sales since the start of Covid, that’s got to hurt. While the former might be manageable, the latter is clearly a deluge. That number skyrockets to 25% to 30% for e-commerce. Industry estimates for conventional retail is 5% of purchases get returned. To begin, plenty of returns are out there. Instead, they continue to receive, review, reallocate and repeat in the same awkward way.
Interestingly enough, however, there doesn’t seem to be enough pain in reverse logistics to get many companies to fix their generally inadequate and manual processes. That’s not a bad summary of reverse logistics these days.
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