While it may seem like there’s ample time for retailers to prepare for the next peak season, the reality is that there is less time for supply chain recovery than ever before.
As brands finally caught their breath from the holiday season, they moved right into the returns season with little to no reprieve. And now they find themselves about to enter the planning phase for the next peak season, and these preparations are unlike any that have come before.
One thing that makes 2021 peak season planning unprecedented is the predicted volume of returns that retailers must manage throughout the year. According to a report from a real estate company, e-commerce returns in 2021 could total as much as $70.5 billion, which is a 73% increase over the average found the past five years. Many attribute this increase to the equally historic spike in e-commerce sales that was triggered thanks to the COVID-19 pandemic in 2020. As many will remember, it was a hectic, hurried season for both parties, including the retailers, logistics providers, and the consumers waiting at home.
Global logistics providers with comprehensive networks felt logistical constraints, even though some were agile enough to pivot quickly in response to changes in returns patterns. Others were not so fortunate.
Joe Dunlap, Managing Director and leader of Supply Chain Advisory, recently shared his perspective on what’s been happening in the retail and logistics markets. “Reverse logistics are notorious for being a reactive, manual processes, sort of lagging, determining how long things sit as they go through the returns process,” Dunlap explains, “Frankly, it’s often a drain on already razor-thin margins.”
“Historically, e-commerce returns are about 30% of the total purchases made during the holiday season,” Dunlap says, “However, in light of the increase in e-commerce sales in the 2020 holiday season, we are anticipating something in excess of 40% this year.”
And these e-commerce returns consistently cause an enormous amount of stress on distribution networks, particularly for retailers and parcel carriers. For the average return, reverse logistics costs can amount to up to 59% of the original sales price of the item.
So, how can brands address the increased pressure that the reverse logistics process continually puts on company resources and overall profit margins?
For one, the use of technology such as self-serve kiosks or lockers to alleviate reverse logistics costs associated with the returns process is growing in popularity. Customers can make their returns right in-store while skipping the customer service lines altogether.
Also, using a micro-processing center, like GEODIS | City Delivery, where returns could be re-directed to a store for immediate re-stocking or injected back into the supply chain to a distribution center.
But for those returns that cannot be immediately reintroduced into the retailer’s active inventory, a well-planned reverse logistics program could help reduce costs associated with the shipping and returns handling process. “The value of the product may dictate whether or not I spend the money and effort to fix and resell it, or I ask myself if I should send it to a secondary retail market or just donate it?” poses Dunlap, “These decisions vary dramatically for all general merchandisers who offer a wide variety of product categories.”
For many brands, the reverse logistics process goes well beyond their supply chain expertise. Luckily, GEODIS | City Delivery offers comprehensive returns solutions for retailers of all sizes. Based on the retailer’s specifications, GEODIS | City Delivery will accept return shipments from all channels and return, recycle, donate or liquidate as needed.
Leveraging a last mile delivery provider can be advantageous for brands, both for same-day or next-day delivery solutions as well as returns processing.