E-commerce returns – What makes it a crippling experience for e-commerce industry?

e-commerce industry

We have all come across flashy headlines depicting the success stories of e-commerce companies- but that, is just one side of the story! Amidst all the fortunes, there lies the sting of returns, which has always kept the global e-commerce industry at its toes. Online shopping continues to expand, with revenues from the global e-commerce industry expected to reach USD 3.02 tn by 2018. But, with this surge in online purchases, comes the risk of increased returns. Key industry players estimate that almost 40% of apparels and 8% of electronic items purchased online during the last holiday season resulted in returns. Quite evidently, that accounts for almost 40-60% of the year’s overall returns.

The story behind ‘Returns Guaranteed’

In the e-commerce industry, the priority is to deliver merchandise to customers as fast as possible. Thus, to successfully achieve same day or next day shipment objectives, the majority of the retailers are teaming up with express delivery service providers like UberRUSH and Postmates. Some have even gone to the extent of experimenting with sophisticated drone technology, hinting that it will soon be time for people to look skyward for retail deliveries.

Now, this legitimate focus on the forward logistics have actually left returns management or reverse logistics de-prioritized. Customers do demand fair return policies, however, that does not necessarily imply that the entire procedure of return is their concern. But for the retailers, it’s a whopping USD 1.75 tn headache!

On a daily basis, a retailer needs to deal with all kinds of returns ranging from an apparel that did not suit the preferences of the customer to expired commodities that are no longer saleable. Thus, the process of return, is inherently more complex than delivery- and at times, quite messy. It is a cost which is incurred by the retailer and that too, on the grounds of committing- ‘Guaranteed Returns’.

Every year, a significant share of the goods sold online are either returned or deemed excess. Most of the retailers do not have adequate infrastructure in place to properly manage this flood of unwanted goods.  The conventional reverse supply chain is long and complicated, with goods traveling from consumer to retailer to vendor to liquidator to wholesaler to reseller and finally to a secondary buyer. Lost in this infinite retail loop, most of the products eventually lose their value, thereby ending up in landfills.

The bottom line

Considering the complexities, there is very little that an online retailer can do at this point to completely eliminate the issue of returns. However, what it can definitely do is count them as an opportunity that can be utilized. Take e-Bay India for example. The company has teamed up with 15 organized refurbishers like GreenDust, Budli, My Return Solutions and Value Cart. These companies have an organized quality check framework which adds value to the entire process of validating every returned product delivered to them. The returned products are refurbished systematically and eventually resold.

So, there are technologies to leverage on and success stories to replicate. It just depends on the retailer’s ability and will to capitalize on the opportunities that come with efficient management of reverse logistics.

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