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E-Comm: Reverse Logistics (Returns)

Reverse Logistics (Returns)

Your e-commerce customers buy things from you. And they often return them.

And more and more, they return them to your brick-and-mortar store (if you have one).

The rise of e-commerce returns to stores.

The total number of e-commerce returns increased by a whopping 70 percent in 2020 compared to 2019, coming to $102 billion in merchandise sent back to the retailer. (Note that an earlier press release from the National Retailers Federation estimated that all 2020 returns would total $428 billion.)

This can be a massive cost to sellers, even though many require customers to pay for return shipping. Yet, it’s still a cost – mostly in restocking – so a few retailers have started simply refunding the purchase price and allowing the customer to keep the product.

Yet as we mentioned in an earlier report on e-commerce logistics, people tend to enjoy heading to a store to pick up items ordered online and return those they don’t want. You’ve probably noticed an increase in this phenomenon yourself.

E-commerce returns tend to be higher than in-store purchases (20%, compared to 8-10% percent for in-store purchases.)

This was a problem for hybrid retailers (offering both online and in-store purchases) because their supply chains understandably were created around their in-person/brick-and-mortar business.

Yet what was a problem could also become a plus for retailers.

Amazon’s partnership with Kohl’s is a perfect example. People can return Amazon purchases to Kohl’s. Amazon decreases its returns shipping costs and Kohl’s gets additional foot traffic into its stores.

It also helps that the Amazon returns desk is in the back of the store, thereby “forcing” returners to see Kohl’s products. On top of that, they also receive Kohl’s Cash, encouraging them to purchase a Kohl’s product or two.

The problem arises in what to do with the actual return.

As mentioned above, most retailers aren’t equipped to handle e-commerce returns. Plus, a large majority of returns occur right after the holiday season and during other, more minor “shopping seasons” such as summertime and back-to-school.

While larger retailers can employ automation and AI to help handle returns, many mid-sized and smaller retail companies can’t.

Yet, a massive number of returns can become a bottleneck for your regular returns staff. People have to determine an item’s quality (can it be resold), sort it, tag it and scan it into the system.

Mini-returns warehouse in back-of-store

Many retailers – particularly larger ones such as Target and Walmart – can reconfigure the back of their stores to become mini returns warehouses. But smaller companies can’t. And, even if they could, dealing with returns is a manual process and requires additional labor either way.

Partnering with e-commerce/logistics staffing experts, Hire Dynamics

The volume of e-commerce purchases coming back to our current brick-and-mortar clients – and we predict that the returns season this year will be just as heavy, if not more so.

You’re going to need people to manage the returns. This lends itself well with staffing support such as ours, especially because of its seasonality.

Why bring in dozens or even hundreds of people for just a few weeks when you know you’ll

  1. a) have to find them quickly and b) you’ll be letting them go just as quickly? And, don’t forget unemployment payments could become a concern.

As a distribution/warehouse staffing company, we have a robust talent pipeline and continuously build it. We can bring in talent in mere days, if necessary.

We’re always happy to discuss logistics, e-commerce, distribution and more with you. Contact us to learn more about our staffing services.