New research from DHL Supply Chain has revealed that almost half of retail and consumer goods businesses are considering changes to returns handling processes to bring down the cost and environmental impact of returns.
The company reports that returns handling processes that aren’t designed for the current large volumes are a major source of the challenge. Retailers are struggling to effectively process and extract maximum value out of returned items leading to financial loss as well as environmental waste. According to the research, 17% of surveyed businesses are turning to disposal as their primary method for handling returned items that aren’t being restocked and sold. With returns increasing on average 19% in the last two years, recent inflation is causing businesses concern and hastening the need for change.
A lack of integration between e-commerce and other channels is said to be exacerbating the problem as it reduces the ways in which returned items can be restocked and resold. The company argues that designing product flows and cycles in the most efficient and environmentally friendly way is key to tackling this challenge.
The company also asserts that DHL’s omnichannel returns handling capabilities bring together returns from all sources and its digital returns system enables colleagues to ‘grade’ items to determine the best way to handle the product, whether restocking at full price or discounted rate, repairing, reselling on a secondary marketplace, or recycling. According to DHL, it then has the capability to fully manage the goods through each route, from specialist repairs to charitable donations.
While the financial burden of returns is being felt more acutely due to global economic instability, environmental concern remains one of the main drivers for change. A third of businesses stated they are already calculating the carbon emissions associated with returns and the same number plan to start doing so. What’s more, nearly nine out of 10 retailers have plans or targets to reduce carbon emissions associated with returns.
As well as looking at returns handling, businesses are exploring the use of technology to drive down volume such as virtual fitting rooms. Meanwhile, many businesses are considering changes to their customer returns policies with a quarter of those surveyed exploring charges for returns not made in-store. However, these changes are being approached with caution due to concerns they could affect customers.
Nabil Malouli, senior vice president of e-commerce and global returns at DHL Supply Chain, said, “We’ve reached a tipping point in returns both financially and environmentally, and retailers are right to examine their current returns processes and reverse supply chains. Our research shows that customer experience remains the number one priority for retailers but that doesn’t have to be sacrificed with dramatic changes to returns policies. Innovative ways to bring down overall volumes, combined with more sophisticated returns handling capabilities allow retailers to offer faster refunds, quickly restock across multiple channels, repair for resale, and recycle responsibly. Enhancements like these have the potential to drive up revenue and reduce waste, while also enhancing the overall customer experience.”
Read more key returns updates from the parcel and postal technology industry, here.