Smart Strategy Is Key for Surviving Customer Returns

This is the time of year for serious customer returns — especially with apparel and accessories. Because whether through buyer's remorse, gift recipient dissatisfaction, relaxed return policies, or the substantial increase in online purchases (which equate to higher return rates), consumers are returning goods to the tune of $68 billion — which is even greater than last year's figure.

This vast amount of returned merchandise creates a real conundrum for retailers that need to determine the best solution to generate asset recovery. While shipping inventory to outlets and expanding clearance departments might make sense for some brands, most will have more returned inventory than shelf space for resale. Below are the three steps to take when developing a returns-recovery solution.

1. Recognize returns need recovery.  Strategic is always better than scattered, which means "returns-inventory" retailers must look to the secondary markets for meaningful asset recovery. Strategies retailers use to sell new in-store goods don't always translate to the returned or past-season item. Therefore it is essential to enter the secondary market, which is rich with buyers looking to source inventory. You can better target and access these buyers through online marketplaces run by an established vendor who knows how to manage, fulfill and market to these groups through multiple channels.

2. Even returns have the Golden Rule for customers.  Rather than seeing returns as a potential revenue stream, many retailers see it as a headache and lack a streamlined process for it in their reverse supply chains. Unfortunately, a lack of strategy means a loss to the bottom line. Buyers are often more savvy in secondary markets than those looking to purchase in-store or through the traditional online channels. While retailers and apparel manufacturers may not want to invest the money or time into developing a full-service marketing, fulfillment, customer service and shipping solution for customers seeking surplus, they should seek a provider whose core business is the reverse supply chain and that can offer a turnkey solution for optimal asset recovery. From launching white-label online channels to selling returned merchandise, to placing it on already existing platforms, the key is to find a platform with existing dedicated buyer networks to quickly handle a high volume of product that will allow retailers to recover more revenue by putting customers first in secondary markets.

3. Utilize a trusted partner.  Retailers are focused on bringing customers into their stores to purchase "A" goods, and time spent processing returns is a drain on productivity. Rather than leaving returns to overburdened employees or risking the loss of value through local liquidators, retailers can take advantage of full-service, trusted solution providers to facilitate an efficient, sustainable, and compliant returns management process. Retailers also benefit from the increased value derived from a provider's capability to target and market to buyers actively seeking inventory, and create a better experience for customers with brands across the supply chain.

Enhancing the reverse supply chain with the above strategies helps retailers to not only survive the returns season after the holidays, but to incorporate a long-term winning solution into the business. By working with a vendor that knows the reverse supply chain and has a dedicated base of buyers, a

retailer can apply best-in-class practices across its operation, maximizing total supply chain value and increasing recovery on surplus inventory. In addition, a better process produces results that support strategic goals for the business, such as augmenting brand perception and enhancing sustainability. A streamlined and efficient process with the right partner can turn the returns conundrum into an opportunity for your business.

Jim Rallo is the president of the Retail Supply Chain Group at Liquidity Services, Inc., a global solutions provider in the reverse supply chain with the world's largest marketplace for business surplus.
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