Why AI Is a Key Element in Helping Retailers Achieve Zero-Waste Returns Goals

1/18/2023
returns

Eighty-six percent of brands say sustainability is a priority across their vast supply chain. Unilever pledged net zero emissions by 2039, and P&G promised the same by 2040. Walmart, IKEA, H&M, Kingfisher, Best Buy, and others joined the “Race to Zero” by 2050. Zara pledged to reduce and offset all emissions by 2040, while Forever 21 said it’s moving away from fast fashion. 

These organizations agree: Acting responsibly is critical for the future of our planet. It’s also key to retaining loyal customers. Between 2018 and 2019, Forever 2021’s followers left the fast fashion retailer in droves for more sustainable and trendy competitors. An IBM survey of over 16,000 people revealed 49% chose premium sustainable goods over discount items. Echoing this sentiment from a returns perspective, 75% of consumers said they would be more loyal to a retailer if they knew the company refurbished unwanted items rather than tossing them away. 

Retailers’ sustainability goals are lofty. Still, they can succeed with commitment, participation across the supply chain, and intelligent technology. Artificial intelligence (AI) is a crucial element in achieving zero-waste initiatives. Here’s why software-enabled returns management can have a significant impact. 

Returns are a Wasteful Proposition

From financial costs to transportation emissions and product waste, returns can be extraordinarily harmful to the environment. That’s because when customers return purchases, retailers must ship them to several locations, including consolidation centers, regional distribution facilities, and return processing and repair centers before the items reach their final destination.

As a result, 6-plus billion pounds of returns end up in landfills each year because they are outdated, low-value, or damaged, making them ineligible or unprofitable for resale. These challenges have led retailers to seek third-party returns partners and AI-based smart technology to recover lost revenue and reduce waste. 

AI and Smart Tech Benefits

Disposition engines are one of the most crucial tools for minimizing return costs. This technology collects data from millions of products, assigning attributes like retail value, transportation, and handling costs to help retailers make the most sustainable returns decisions. 

These disposition engines can be integrated into POS systems or used on handheld devices, to easily accommodate whatever solution the retailer needs. By simply scanning-in a product, employees receive lightning fast allocation decisions that reduce transportation requirements and determine the most profitable resale route helping retailers avoid landfills wherever possible. 

Online disposition engines work similarly for websites and physical stores. When a customer initiates an online return, smart plug-ins direct them to nearby drop-off locations or provide downloadable shipping labels to send the product back to the closest return center, reducing transportation requirements. 

The beauty of this technology is that it improves the customer experience and significantly reduces the environmental cost of returns. Our 2021 data showed that intelligent disposition technology, combined with reverse supply chain infrastructure, spared 40-plus million pounds from landfills, prevented over 4,200 metric tons of C02 from entering the atmosphere, and eliminated 1.7 million miles of unnecessary reverse shipping. In the process, it helped retailers recover billions in lost profits. 

The Bottom Line

Various AI and data-learning tools, like virtual fitting rooms and recommendation engines, exist to support retailers’ planetary impact goals. Still, disposition engines are a critical piece of the reverse optimization puzzle. Fortunately, there has been an incredible surge in interest and implementation of these tools, signifying a substantial shift toward a more sustainable retail industry. 

— Yuri Yushkov, CTO, goTRG

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