BY MARK B. SOLOMON, EXECUTIVE EDITOR – NEWS
REVERSE LOGISTICS
IT MAY BE HARD TO FATHOM, BUT MERCHANDISE
returns were once orderly processes. A consumer returned
a product to the store where it was purchased. The mer-
chant had straightforward guidelines for accepting returns,
and the merchandise had to be returned in good, if not
pristine, condition. By the way, there was no “e” before
“commerce.”
Today’s returns are anything but straight-line events, due
to the digital tsunami that has created what could be called
a reverse omnichannel effect. Returns can come from any-
where, at any time, and be received at multiple locations.
The convenience of shopping from mobile devices means
the length of the returns pipeline is greater than ever before.
Retailers with online footprints (which is everyone) and
e-tailers tolerate, if not encourage, orders of multiple items
in the hopes a buyer will order four and perhaps return two
instead of three; that practice effectively stuffs the returns
channels. Because merchants are loath to set stringent
returns policies for fear of being skewered on social media,
scruffy stuff that in the past would be ineligible for refunds
or credits is instead accepted. The rise of a phenomenon
known as “fast fashion,” where new designs replace old
at the blink of an eye, means that there are now 12 design
seasons a year instead of the traditional four, and has dra-
matically increased returns turnover.
In the high-tech and electronics segments, tougher envi-
ronmental regulations make it harder for companies to
toss out a product with little residual value. For instance,
a liquid crystal display (LCD) module can account for up
to 75 percent of the greenhouse gas and carbon emissions
of an entire device, according to Li Tong Group, a Hong
Kong-based reverse logistics specialist that manages the
reverse supply chains for dozens of original equipment
manufacturers (OEMs).
SQUEEZE THOSE LEMONS!
These obstacles have not stopped revenue-hungry companies from trying to make lemonade out of lemons, however.
The practice of repositioning returned merchandise for a
new forward move has gained momentum as manufacturers, retailers, and their reverse logistics practitioners look to
monetize returned goods that might otherwise be drastically marked down or simply thrown away. While the redeployment process wouldn’t be considered a profit center, it
could play a key role in mitigating sizable losses bound to
accrue from using the traditional disposal methods.
As a result, a tactic that had been executed sporadically
and opportunistically has become strategic in nature, said
David Vehec, business development specialist–retail at
Pittsburgh-based Genco Supply Chain Solutions, a pri-
vately held reverse logistics specialist acquired earlier this
year by FedEx Corp. “The use of redeployment strategies
strategicinsight
Rinse, return,
and redeploy
With the right strategy and IT tools to support
it, retailers and manufacturers can mitigate
the economic hit of product returns.
