Though the holiday gift giving season is well over, there is a different kind of hustle and bustle taking place in the retail world right now -- handling returned merchandise.
January and February are the busiest months of the year for holiday returns, with returns equaling about 10 percent of overall sales. And as more and more consumers make purchases online, product return rates post-holiday have significantly increased. In fact, returned goods from online sales now make up 20 to 30 percent of all returned merchandise for retailers. All of this activity means that retailers need to find a fast, cost-effective and sustainable means for disposing, recycling or reselling the products that are reentering their supply chains. That’s where reverse logistics comes in.
Reverse logistics is the process of managing goods from the point of consumption to the point of origin. And these days, it’s all about speed. When a product is returned, it is basically a lost sale. So retailers have to maximize the value of that returned asset, and they have to do it fast, in order to not take a hit to their bottom lines. For example, more than 70 percent of the products returned in the consumer electronics and high-tech industry have nothing wrong with them. The quicker those products can be repackaged, put back into inventory and made available for sale, the quicker those companies can recover their value.
To do this effectively can be complex, costly and labor intensive. The returns process generally includes logistics and transportation, depot repair, sales and marketing of refurbished products, finance (validating warranty repairs), customer service and channel management.
There is also a great deal of physical handling of the returned goods to determine the product's condition -- should it be repaired, refurbished, scrapped, recycled or repackaged -- and employees need specialized training depending on the types of goods they are dealing with (consumer electronics, appliances, apparel). Technology solutions also have to be customized to track the products through every step and manage credit reconciliations and compliance-related issues.
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