The holiday season of 2020 is going to be different than any that have come before it. The pandemic has changed the way that customers shop. E-commerce sales have increased significantly, with some companies seeing triple-digit growth. As businesses are starting to adjust to the change in the buying habits of their customers, a new challenge is starting to arise — an increase in returns.
Returns have always been a pain point for fulfillment centers, but this holiday season will test even the most seasoned reverse logistician. A 2019 study by UPS reported that 39% of online shoppers in the US often return their online purchases to brick and mortar stores. With the current global environment, a large portion of returns that were once handled in store are now going to be shipped back to the fulfillment center. Being prepared for the coming influx of returns is going to be vital in minimizing the loss in profit margins that comes with handling returns.
Clearly Defined Returns Policy
Customers expect easy. From the ease of shopping on their phones to the process in which they return items, all aspects of the shopping experience are expected to be easy to navigate. According to BigCommerce, 49% of online shoppers review the returns policy before purchasing online. Having an easy to locate, clearly defined, and simple returns process not only makes the decision for a customer to make the initial purchase easier, it also increases the chances of repeat business from that customer. While returns, in general, may be seen as a profit-losing business segment, clearly defining the process and making it easy on the customer can help recoup some of the losses by generating future sales with the customer.
Fulfillment centers, by nature, are great at fulfillment but are frequently not as efficient when it comes to handling returns. Often, reverse logistics are an afterthought and are seen as a pain point for the operation. This holiday season is going to serve as an eye-opening experience for many companies who are not prepared for the increase in returns. This perceived pain point will quickly turn into a serious issue for those who are not prepared. So, what can be done to help ease the burden of handling returns?
1. Categorization of items is key. Do not have your employees waste time researching or trying to decide what to do with a return as it comes in. Have well-defined rules for product type and condition so that associates have clearly defined procedures for handling the item as it is received.
2. Be organized. Clutter slows the returns process down. Anticipating how to receive, store, work, and get items back into inventory will limit the clutter, speed up the process, and help prevent loss or additional damages to items. Pre-plan and allocate enough space to support the peak surge, which is often much greater than the standard flow.
3. Return items to stock quickly. The faster you can get an item returned to inventory, the better chance you have for selling the item. No matter if the item will be resold as new or discounted, getting it back into your inventory will help minimize the loss experienced through the return.
4. Be prepared for handling waste. Returns generate waste. One of the (often overlooked) side effects of returns is the amount of waste material and product that does not go back into inventory. Having easy to use and clearly defined systems for recycling, trash removal, and for the handling of non-inventory product will speed up the process.
Social Distancing and Returns
The days of setting up rows of temporary tables and having associates elbow to elbow to work through returns are over. Social distancing in the workplace is here. Keeping employees distanced and implementing increased employee safety plans during peak season is a new challenge that all companies are going to have to address. Putting plans into place prior to peak will be paramount to a company’s ability to be successful during their busiest time of year.
Plan for Now While Planning for the Future
With customers not only continuing to increase the amount of online shopping they do but also the type of items they are buying online, many retailers are in a position where they must adapt to survive. With peak season rapidly approaching, many are going to be left scrambling to update their processes to help with the continued change in consumer buying behavior.
Regardless if the change is in the associates’ SOPs, the equipment used to process returns, the software used, or a combination of all of the above, it is important to keep in mind that while reacting to the immediate need of preparing for this holiday season, you still need to plan for the future. Repurposing existing systems and equipment or installing flexible equipment is often possible to handle immediate needs. When making changes for future growth, it is important to incorporate systems that are modular, flexible, and scalable.
Who knows what the next major event will bring? Building an infrastructure to handle the increased returns that will come with the 2020 holiday season while preparing your business to be able to adapt to any future challenges will be essential to ongoing success.
Josh Duane is the Director of Sales for Hy-Tek Integrated Systems Southern Operations Division. Hy-Tek designs and implements material handling and automation systems across a multitude of industries. Josh can be reached at firstname.lastname@example.org
This article originally appeared in the September/October, 2020 issue of PARCEL.