In the US, online returns accounted for a total cost of $247 billion in 2023. Our research found that 63% of merchants say that returns are a significant or very significant problem for their business, an increase of 6 percentage points from the previous year.
Returns are a core component of commerce, with most retailers suffering high costs due to inefficient and slow returns processing. The longer items take to ship, process, and restock, the less chance the retailer has of reselling at full price and maximizing revenue. This leads to more items heading to landfill, greater loss to retailers, greater use of resources, and highercosts due to operational inefficiency.
To increase the speed of returns and boost revenue, retailers need to optimize the returns journey.
Faster returns mean more revenue
The longer returns take to process, the more resources and time they cost. The longer they take to get back to the shelf, the less likely they are to be resold – and the less likely they will sell for full price rather than losing money through markdown.
With an intelligent returns management system, retailers can collect and use data to optimize the entire returns process and speed up the time it takes for returns to come back, be processed, and be ready for resale. By collecting data on returns before they arrive, retailers have full visibility of which items are being returned, by who, and why. This gives each relevant team time to prepare for the management of returns before they arrive, so staff know what to expect and what needs to happen before opening the package.
In addition to full visibility, returns data is used to make automatic decisions for each return. This removes the need for manual decision-making, a process that is both time-consuming and can lead to confusing and inconsistent results, creating delays in the returns process. For example, high-demand items (identified by SKU) can be flagged from the moment a customer registers the return, sent through priority transport, and prioritized for restocking once in the warehouse – allowing retailers to resell quickly without heavy discounts..
Minimizing costs with speedy returns
The faster retailers can get returns back on the shelf for resale, the more revenue they’ll be able to recapture. Having a faster, more efficient returns management system will also help retailers save costs in several other ways, including by decreasing disposal costs.
The more items that are resold, the less go into landfill. According to NRF and Roland Berger data, per $35-$40 return, approximately $4-10 is lost on disposal costs and a further $3-7 on transportation costs. Both these losses can be reduced through automatic decisioning toreroute returns to the most efficient location. For example, if an item is out-of-stock at a particular store, the return can be automatically redirected to that location. This helps retailers manage inventory more efficiently while reducing transportation costs by ensuring that each return is sent to the right place at the right time rather than manually redirecting each parcel to a central warehouse for processing and needing a second, onward journey.
Returns management systems can also help retailers reduce costs through eliminating policy abuse and fraudulent returns, which amounted to a total loss of $101 billion in returns abuse and fraud in the US in 2023. Using an online portal for customers to register returns not only collects data that helps to orchestrate the entire process, it can also block and prevent out-of-policy returns from being accepted in the first place. Blocking these returns not only stops a proportion of returns fraud outright, but reduces transportation, processing, and disposal costs and gives staff time to focus on the returns that can recapture revenue and aid future growth for the business.
Turn your returns from problem to profit
The longer returns take to process, the more it costs retailers. To save costs and increase revenue, retailers need efficient returns management systems that use data to automate decision-making and optimize returns based on the individual item and return reason.
At Blue Yonder, our returns orchestration engine optimizes returns at every point, increasing efficiency, reducing costs, and speeding up return processing for retailers, thereby increasingrevenue.
Find out more about our returns solutions and how we can help businesses transform returns into revenue here.
