Challenges with the Returns Management Process

February 28, 2022

5 min read

RESOURCES // BLOG

Sustainability initiatives have had additional positive impacts during the pandemic: improving supply chain visibility and resilience.

According to the National Retail Federation (NRF), retailers expect more than $761 billion in merchandise sold in 2021 to come back to them through the returns management process. Compared to 2020’s returns figure of $428 billion, that’s a 77.8% year-over-year increase.

The 2021 total rate of returns, 16.6%, is up from 10.6% during 2020, but based on NRF data, online returns in 2021 are in line with recent years at an average of 20.8%.

U.S. consumers have been on a major shopping spree since the pandemic began in 2020, replacing services with goods as many consumers stayed close to homes due to COVID-19. According to the US Census, total retail sales for 2021 were up 19.3% compared to 2020.

Customer Expectations for A Seamless Process

However, with the healthy sales come returns and — as many consumers discovered the ease in online shopping — there are consumer expectations for ease in returns process as well.

Among the ways retailers can make the returns process experience a positive for one for consumers are making returns conditions clear and concise to consumers.

Market research from Optoro show that over 90% of consumers read the return conditions before making a purchase.

Just like the expectations of “free delivery”, consumers expect “free returns” and the quick handling and processing of returns to maintain and/or improve customer loyalty.

Studies show that over 80% of customers will not purchase from an online store that charges return shipping fees.

But, the handling and management of returns is anything but “free” for retailers.

According to the Reverse Logistics Association’s quarterly returns index survey, in addition to increasing returns volumes, labor and transportation costs are impacting retailers’ returns handling and processing costs. Expectations are that this will continue through the year.

How Can You Better Understand Returns Costs?

To better understand returns costs, retailers need to be able to manage their returns data much like their last-mile or other supply chain data. Utilizing business intelligence tools that are connected with warehouse management systems (WMS) and transportation management systems (TMS) enable better analysis and execution.

Data provides valuable information on how to improve customer service and loyalty as well as mitigate costs. For example, insights such as carrier performance are important for managing the delivery and return process.

Dashboards and reports also make it easier for retailers to plan, make decisions quickly, and create more transparency and efficient analysis to help accelerate and improve processes.

By utilizing business intelligence tools, retailers will gain visibility into their returns costs which, in turn, will provide retailers with options to lower transportation and warehousing costs.

Want More Insight?

Looking for more insight into transportation trends for the remainder of 2022? Download the Q2 2022 Transportation Forecast now.

Related Tags

SUBSCRIBE

The Expert Lens

Weekly actionable advice to keep costs down and improve your transportation management.

Share:

Share on linkedin
Share on facebook
Share on twitter

Related Articles

BLOG

The COVID pandemic accelerated many trends in consumer behavior. It exposed risks both on the supply and demand sides of the supply chain. Supply chain strategy now needs to consider many of the adopted behaviors to be permanent. Companies have to be able to support multiple fulfillment channels, efficiently handle returns and insulate themselves from regional disruptions across the globe.

...