As e-commerce continues to grow so too does the impact of returns management on a retailer’s business. According to the National Retail Federation, $761 billion in products – 16.6% of total U.S. retail sales – was expected to be returned in 2021.
Of course, those returns aren’t spread out evenly through the year. Returns follow sales and just as there is a peak shopping season that accounts for a significant percentage of retail volume, there is a corresponding “returns peak” that accounts for a comparative volume of returns.
Legacy returns processes can be overwhelmed during this peak, leading to delayed processing that frustrates customers, diminishes the value of returned merchandise, and dilutes the results from an otherwise successful peak season.
1. Creating the foundation for success
Retailers naturally prioritize outbound order fulfillment over inbound returns—you won’t have any returns if you don’t first secure and fulfill orders. But, when all the focus is on fulfillment, returns management can suffer. And the inefficiencies and missed opportunities that result are amplified when return volumes spike.
DHL Supply Chain employs a centralized and integrated approach to returns management that brings the same discipline, efficiency and scalability to returns management as is applied to outbound fulfillment. This approach focuses the skills, resources and systems required to support returns management in a central location to maximize value and optimize efficiency. Tailored to the needs of each supply chain, it consolidates inventory from e-commerce returns, store returns and excess store inventory to enable more efficient processing and disposition.
It also provides greater consistency in how personnel are trained, and merchandise is classified during inspection. Because returns processing is integrated with warehouse operations, merchandise that passes inspection can be quickly returned to inventory for resale.
With this centralized and integrated foundation in place, returns management can more easily scale to support fluctuations in both outbound shipments and inbound returns. Because return volumes are typically low during the holiday gift-buying season, returns personnel can be flexed to support outbound shipments during sales peaks. Then, when order volumes drop after the holidays and returns volumes rise, they go back to returns processing where they are supplemented by warehouse personnel who are cross trained to manage returns.
2. Integrating returns into peak season planning
Effective planning is essential to peak season management. Using historical data along with sales projections for the coming season, retailers work tirelessly to ensure they have the labor and systems in place to fulfill orders while maintaining a high level of customer service. However, those plans often only extend through the holiday season, leaving returns management processes understaffed during the peak return season.
At DHL Supply Chain, we use sophisticated recruiting processes to ensure we have the labor required to support expected order volumes during peak shopping season. Where necessary, we extend peak labor planning to account for the high volume of returns that follow holiday shopping. This enables a smooth transition between the shopping peak and the returns peak and ensures the necessary resources are available to meet customer expectations for fast returns processing.
3. Leveraging technology to streamline processes and increase value
The key to effective returns management is balancing speed and quality. Inspections must be performed thoroughly to ensure damaged merchandise isn’t returned to inventory while simultaneously moving merchandise efficiently through the process to prevent backlogs. Clearly defined standards for grading are essential as is proper training of returns personnel. But, even with those in place, returns can be difficult to manage without the proper systems.
A dedicated returns management platform connects the returns ecosystem to other supply chain systems and enhances processes to streamline logistics, inventory and processing. With a dedicated platform that encompasses requests, receiving, inspecting, processing and exchanges, efficiency and quality improve and returns processes can be better integrated into warehouse operations.
To be effective, platforms must enable easy customization to a retailer’s products, standards and processes. As they continue to evolve, these platforms are not only improving material flows but removing uncertainty from the inspection process. Visual displays can show examples of common return issues and how they should be classified as well as guiding inspectors through any potential remediations. These systems also provide a source of data that retailers and their partners can use to analyze returns, isolate common causes and make changes that drive down the number of returns.
Peak season doesn't end with the end of the holiday shopping season. Retailers that prepare for the returns peak with well-designed, centralized returns management processes supported by trained personnel and dedicated systems, can deliver a better returns experience to their customers, reduce the cost of returns management, and maximize the value of returned merchandise.
With our disciplined, scalable and integrated approach to e-commerce order fulfillment and returns management, DHL Supply Chain is well positioned to help retailers efficiently and profitably manage the holiday peak season and the post-holiday returns peak.
For more information on DHL Supply Chain eCommerce capabilities, visit http://app.supplychain.dhl.com/e/er?s=1897772577&lid=12385.