With the explosion in e-commerce and no questions asked returns policies, retailers are having to cope with as much as half their orders coming straight back.
Now, an army of robots are being put to work to make the re-integration of unwanted stock as simple and efficient as possible.
Return item handling costs are typically three to five times higher than the original shipping costs, leaving businesses to pick up the pieces and find ways to make reusable stock available for re-sale as quickly as possible.
The problem is said to be particularly difficult for fashion retailers, where items may be seasonal or ordered in multiple sizes.
In their latest White Paper, The Dark Side Of E-Commerce, automation experts Swisslog, compare the battle to give consumers what they want, whilst retaining business competitiveness, akin to an intergalactic fight between the dark and light side, including those with honest and less than honest intent.
“It’s a double-edged sword, says Swisslog UK MD, James Sharples. “You get more custom because you offer a really good returns policy but you are going to get more returns off the back of it – it’s a zero sum game between customer and retailer.”
Honest, Over-Orderer & Fraudster
E-commerce expert, Bernd Kratz, categorizes goods returners into three groups – the honest, the over-orderer and the fraudster.
The honest customer really wants the item concerned, but there is an issue with it that has not met their expectations. The over-orderer views the shopping experience as a chance to put a fitting room in their own home, ordering a variety of sizes or colours in the knowledge that most of it will be sent back. The fraudulent returner orders an item with the intent to use it once and then return it.
“We can all identify with each of these types of people,” says James. “Whilst the honest customer may feel guilty for returning an order, the fraudster certainly doesn’t! Not to say that is a new phenomenon, but due to the comparative anonymity of the web, it is now far more prevalent.”
The cost of return handling is also a global issue, even where labour is cheap. Returns mean double logistics cost (shipping and reverse-logistics), no turnover and sometimes a disappointed customer.
In 2015, research from the retail analyst firm IHL Group put the global cost of returns at a staggering £425.6 billion per annum (€541.63 billion), whilst in the US, the National Retail Federation expects that eight percent of all sales this year – equating to roughly $260.5 billion (£184 billion), will be returned. Automation in this area can really help speed up the process. Integrating an automated solution, whether it be a fully or partially operated system, could have major benefits, such as speeding up re-delivery to other customers and reducing personnel costs.
“We are in a modern, technological world,” concludes James. “The ability to order products is literally at our fingertips, made simple and quick by a host of technologies that proliferate the modern supply chain. The challenge to retailers is what to do now the technology is loaded in the customer’s favour. Whether that is full automation, or humans and robots working in collaboration. Either way, we are more reliant on robots than ever before. Thankfully, they’re more C3-PO, than T-1000.”
To download the white paper, visit www.swisslog.com/darkside
Swisslog designs, develops, and delivers best-in-class automation for forward-thinking health systems, warehouses, and distribution centers. We offer integrated solutions from a single source – from consulting to design, implementation and lifetime customer service. Behind the company’s success are 2,500 employees worldwide, supporting customers in more than 50 countries.