differences and how they can affect operations.
WHAT'S THE DIFFERENCE?
A typical industrial or retail reverse logistics
operation handles consolidated pallet loads or full
cartons, usually containing the same or similar
products. E-commerce returns from consumers,
by contrast, are far less predictable. They tend to
arrive in very small and variable quantities, often
just one or two items. They may be similar—
shirts in different sizes or colors, say—or if the
e-tailer offers a wide assortment of items for sale,
they might be completely different products with
wildly diverse handling characteristics.
E-commerce returns generally arrive in better
condition than items returned to stores. That’s
because they very often are unused, and are
unopened and still in the original packaging,
says David Vehec, senior vice president, retail for
Genco, a third-party logistics company (3PL) and
reverse logistics pioneer. Store returns are more
likely to have been removed from the packaging
and to show signs of use.
Historically, e-commerce purchases, especially
consumer electronics, have yielded more “no
defect” or “no fault found” diagnoses than other
types of returns, says Steve Sensing, vice president
and general manager of high-tech operations at
Ryder Supply Chain Solutions. One reason is
that online shoppers don’t have the opportunity
to physically examine an item until after they
have paid for and received it. “You get a higher
percentage of buyer’s remorse with someone who
buys on the Internet than you would with someone who goes to a store and makes a purchase,”
he observes.
Another reason for the high rate of “no defect
found” e-commerce returns is that the consumer
typically obtains a returned merchandise authorization (RMA) by filling out an online form. “At a
store, associates have the opportunity to challenge
the customer and ask questions about why they
are returning the item,” Vehec says. “When you’re
dealing with a Web purchase, you don’t have that
[face-to-face] engagement with the consumer.”
SEPARATELY OR TOGETHER?
All that creates some challenges for facilities that
accept returns of merchandise ordered online,
particularly in a multichannel or omnichannel
environment. “How you handle [returned mer-
chandise] depends on whether it is coming back
through a storefront or through e-commerce,”
Vehec says. “When you combine the two, that’s
where the complexity increases.”
Carrie Parris, who as director of corporate
strategy at UPS is responsible for the company’s
reverse logistics strategy, cites the example of
“noncongruent” inventory—items a customer
buys online or in one store location and returns
to a store that does not carry that particular
stock-keeping unit (SKU). When that happens,
the store staff must accept an SKU that is not in
their system, be able to track its whereabouts, and
make decisions about its disposition based on the
retailer’s policies. “Some of our retail customers
have a clearance strategy [putting all returned
merchandise on the clearance racks] and call it
a day, while others pull noncongruent inventory
back to the DC,” Parris says.
Another challenge involves refunds and credits. Consumers usually receive them on the spot
when they return merchandise to a store. But in
e-commerce, the seller must verify that the specific items that were authorized for return have
actually been received before it can issue a refund
or a credit. That can stretch things out and color
the online shopper’s perception of service quality.
Some e-tailers, therefore, rely on certain shipment tracking events to trigger refunds. Others
wait until the items have gone through the entire
returns handling process, Parris says.
A retailer’s crediting, accounting, and inventory tracking policies may even influence physical
handling procedures. If those policies differ for
e-commerce and brick-and-mortar sales, Vehec
says, then those parameters will influence the
design of the process flow, including at which
