‘Tis the Season for Returns

Today marks the beginning of National Returns Week – when tens of millions of returns from the 2024 holiday season will be shipped.? While retailers and direct-to-consumer brands understand that returns are an essential component in digital commerce, many are learning to leverage returns as a competitive advantage versus the traditional “necessary evil” perspective.

However, the cost of returns is often myopic because only hard costs (e.g., shipping, handling, restocking fees) are considered. The less tangible costs – or soft costs – can significantly impact a merchant’s business, particularly in the areas of customer service or loyalty, overall efficiency, brand reputation and CLV (customer lifetime value).?

Customer Service Customer service representatives spend significant time handling return requests, processing refunds, and addressing complaints, which diverts resources from other critical areas. This is particularly important considering a single poor returns experience is likely to lessen a customer’s lifetime value.

Operational Disruption Dilutes Efficiency Over the year’s retailers have fine-tuned their outbound supply chains but inbound processes are often rooted in ad hoc processes or initiatives. Managing reverse logistics is complex, with most requiring some form of inspection, repackaging, and retagging before they can be resold. This added workload puts extra stress on all resources, particularly labor. Storage of returned goods also creates new challenges for overcrowded warehouses and often requires additional inventory handling.?

Brand Reputation Complicated or restrictive return policies can harm a brand's reputation, reducing customer trust and discouraging repeat purchases. These negative experiences are easily shared via onsite reviews and through social media platforms. Furthermore, complex or restrictive returns often negate a merchant’s potential for cross-selling and up-selling. In addition to damaging the brand’s persona, it dilutes customer acquisition initiatives and ultimately translates into lost sales.??

Sustainability is another factor capable of tarnishing a brand’s reputation. Many returns cannot be resold or liquidated. These items are often sent directly to landfills despite opportunities to extend the life of a returned item. California recently introduced the Responsible Textile Recovery Act of 2024, which is an extended producer responsibility (EPR)? program for apparel and textile articles that emphasizes repair and reuse, and minimizes the generation of hazardous waste, greenhouse gases, environmental impacts, and public health impacts. This policy approach makes producers responsible for their products along the entire lifecycle – even after the purchase. While the EPR program may seem like an additional cost, it’s actually a blessing in disguise. Instead of being landfilled, unwanted textiles can be liquidated, recycled, donated our used in a waste-to-energy program.?

These types of initiatives will maximize value recovery to offset the hard and soft costs of managing product returns, provided manufacturers and retailers are aligned with a full-service returns management company.?

End-to-End Returns Management In simplest terms, End-to-End Returns Management begins with returns initiation and ends with the return’s final disposition. This comprehensive approach builds loyalty, reduces hard and soft costs, and makes returns more sustainable. Inmar Intelligence, working with Inmar Post-Purchase Solutions, optimizes the entire post-purchase cycle. Inmar Post-Purchase Solutions, a joint venture with Inmar and Blue Yonder, provides more than 3,000 return drop-off locations across the nation, including Kohl’s stores and FedEx Office locations. Customers initiate the return process using the merchant’s app. The customer then receives a QR code via email, which is scanned when the product is dropped-off at a participating location. For even greater convenience and sustainability, returned goods do not require repackaging or pre-printed labels. Customers give the item(s) to the in-store associate, who then bags the return and scans the returner’s QR code. Done. The customer will receive an email confirmation containing the pertinent return information.

Returns are aggregated at each drop-off location, which uses excess capacity within existing shipping lanes. These bulk shipments are sent to one of Inmar’s nationwide returns processing facilities for inspection, sorting and final disposition, which may include return-to-stock/vendor, liquidation, recycling, donation or destruction (waste-to-energy).

Participating merchants benefit from volume pricing (hard costs) while improving the customer experience and making returns more sustainable (soft costs).

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