Home Newsletter Technology, connectivity could be answer for retailers struggling with returns

Technology, connectivity could be answer for retailers struggling with returns

The good news for online retailers this holiday season was sales were predicted to increase by 40% in 2020—totaling $234.9 billion, GlobeSt.com reports. Unfortunately, it was also forecasted that approximately $70.5 billion of those goods would be returned, according to CBRE. Big return surges pose challenges for retailers who then have to put their products back into the supply chain—also known as reverse logistics.

This process is not only time consuming, but costly. It can cost up to 59% of a product’s original sales price, according CBRE. Reverse logistics has become a necessary evil; especially recently as online sales continue to rise amid the COVID-19 pandemic. Even prior to the pandemic, people were doing more online shopping out of a matter of convenience; a trend that’s likely to continue even after COVID-19 subsides.

Reverse logistics and CRE

If online shopping numbers continue to increase, returns are likely to also. That will lead to a need for more space for retailers to receive and process returned products. The industrial commercial real estate industry could see a lift—CBRE estimates up to 400 million square feet could be used to handle returns over the next five years, GlobeSt.com reports.

While it’s good retailers will have all of that space to deal with returns, it could be too much of a good thing—the more space available, the more places a returned item could go to. Items could go back to the retailer’s store, warehouse or manufacturing plant. The first step towards making reverse logistics easier is to streamline the return process.

“It’s an environment this year that’s going to be the most challenging ever,” CBRE Executive Managing Director Americas Industrial & Logistics and Retail Leader John Morris said on the company’s weekly podcast. “So the less well-defined reverse supply chain going under that stress test this year is going to be a very interesting paradigm this holiday season.”

Technology and connectivity could improve the reverse logistics process

Like with any complex process, technology is a great way to make things run more smoothly and efficient. Reverse logistics is no exception. The United States Postal Service (USPS) recently pointed to four technologies that could make handling returns easier for retailers. The first, automatic capture, cuts down on the time employees spend opening returned packages, identifying the item, logging the reason for return and figuring out where the package goes next. Instead, automatic capture allows a customer to note online why they’re returning the item and receive a return label with a specific barcode. When the employee receives the package, they can scan the barcode and see if an item’s damaged, can’t be resold or just wasn’t a good fit without opening it.

Cloud computing is another potential tech solution retailers can use to make their reverse logistics process more efficient. Reports and data are stored on the Internet, rather than on a local computer or server, making them easier to access. Meanwhile, predictive analytics and big data can identify and note issues that might not have been detected otherwise. So if a certain item is being returned often because it arrived damaged, the fulfillment team can prevent additional returns by changing the item’s packaging going forward.

Finally, blockchain technology can track and verify returns against the initial transaction. This helps return teams decrease time spent manually checking returns against receipts. Workers can then focus on their primary roles instead. Blockchain uses a digital ledger that can create a shipment record and compare the returned package’s contents against what was in it when it was shipped.

All of these technological solutions would be ideal for retailers who are likely to see more returns as shoppers increasingly turn to e-commerce to make purchases. They’ll only be useful if the retailers’ industrial space, warehouse, etc. has a strong wireless network. Any commercial real estate owner in the industrial and manufacturing space should be aware that their tenants’ demands for reliable connectivity will only grow stronger as they look for new ways to improve upon their reverse logistics processes.

Joe Dyton can be reached at joed@fifthgenmedia.com.

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