“As retailers are returning to a ‘new normal,’ there will be those who have far too much inventory, others with not enough inventory, and those who simply have the wrong product on the floor — and for some, a combination of all three scenarios,” read a July report from HRC Retail Advisory and Planalytics, advising retailers on how to best position inventory investments.
With e-commerce surging generally, and the pandemic making curbside pickup, store-level fulfillment and other processes increasingly beneficial, the report argues “precise inventory management is much harder, yet more important than ever before.”
Its proper execution also would help firms’ sustainability efforts.
“This crisis has inadvertently made the returns process far more green than it was at the start of the year,” said Charlotte Monk-Chipman, marketing director at U.K.-based online returns management platform ReBound, which has worked with Asos since 2015, as well as Toms and PrettyLittleThing, among others.
Even “online return veterans” are shifting gears. “Before the crisis, many retailers gave customers the option to download and print their own labels and return information at home. However, once the pandemic started we saw a huge rise in the number of customers choosing to fill this information in via online forms or through mobile apps, and quickly realized that this was likely due to thousands of shoppers not having access to the office printer anymore,” described Monk-Chipman.
With the ongoing move from analogue to digital processes across the supply chain, the argument for paperless returns managed in an online “returns portal” instead of providing a label in a box is just one step taken by retailers such as Asos, Boohoo Group-owned Karen Millen and MissPap to streamline their operations and reduce waste — to a cost savings of 640,000 pounds on return labels alone, or 8,000 trees saved a year, in the case of the former.
But it’s just a slice of a company’s environmental impact and shouldn’t be viewed in isolation.
In a May report, returns optimization platform Optoro surveyed more than 2,000 U.S. residents to uncover their return habits during isolation. While Optoro noted a decline in total returns through this period, Ann Starodaj, senior director of sustainability at Optoro, said their research anticipates “a lag and then a surge in returns as stores come back,” in likeness to the “unprecedented” clothing and footwear donations forecast by secondhand shops.
Lags are foreseen in more ways than one. Already the United States Postal Service is balancing financial and operational difficulties, noticing a drastic drop in mail volume and, the word of the moment, “unprecedented” package volume increases similar to holiday volume rates, by many accounts — but with less staff.
The reasons behind consumer behavioral changes in returns are rooted in a need for convenience and safety as confirmed coronavirus cases top four million in the U.S. alone. Traditionally, the steps for returning a package via mail exceed the ease in dropping something off at a store or, in the case of donations, stuffing a garbage bag full of unwanted items, tying it off and depositing it on the steps of the nearest drop-off location.
“Many shoppers, particularly older customers, traditionally preferred to return items in-store, even if they’d purchased them online. The pandemic pushed customers into shopping online more frequently out of necessity, and those who have registered to return products have seen that it can actually be a far more convenient experience,” Monk-Chipman added. On the flip side, “retailers typically preferred customers to buy online but return in-store as there was the opportunity to spontaneously sell further products.”
With continued restrictions on physical retail, the long-term effect could be retailers looking for opportunities to promote their online returns service far more, Monk-Chipman predicted.
Likely due to increased online shopping, Optoro noted more customers returning items via mail than usual and a “really strong trend” on behalf of retailers and brands rewriting flexible returns policies, most commonly extending offers up to 90 days or unlimited.
ReBound has seen similar acts of kindness with retailers temporarily extending policies by 100 days “to cater to customers who may not feel comfortable bringing items back to stores.”
But with such deadlines fast approaching, ReBound has seen “a huge influx of people registering returns online in preparation of sending items back.” On June 29, the company recorded the highest volume of online return registrations since its inception five years ago, which is saying something, given the high volumes typically recorded post-Black Friday.
Flexible return policies are a motivator for many shoppers, but what about green “returnless” returns?
Boulder-based online retailer Pact handles every (free) return on a case-by-case basis, leading with an age-old retail scripture: the customer is always right.
“We want to create as little risk for the consumer as possible when they try products from us. When we see high return rates, we analyze them by the life stage of consumers and by category of product. From there, we will try to improve our communication (fits big or fits small) within our shopping experience (better product naming, photos and fit guides) to better address any points that may be driving returns,” said Brendan Synnott, chief executive officer of Pact.
Pact calculates the carbon footprint for the customer’s chosen shipping option and aims to roll out a carbon footprint measure for individual products later this year.
Optoro’s partner Returnly, a turnkey returns management solution, similarly lets customers keep the product for the sake of the environment — cutting waste, supply-chain and carbon costs of an unwanted return while giving “best customers” a feeling of preferential treatment. Its trademarked “Green Returns” is more advanced than it appears at first explanation, using machine-learning and data science to direct real-time decision-making on whether individual items can be resold.
Still, it draws skepticism, especially when accounting for the “serial returner.”
Often the serial-returner profile is cast situationally as a rose: in many cases, the most profitable for a business across a lifetime, but a thorn to brands and retailers when returns and malicious intent outweigh total purchases.
“One hundred percent returnless refunds is not possible because you will be facing fraud as a few bad actors will buy a lot of inventory,” said Ric Kostick, ceo and founder of 100% Pure, whose business employs the services of Returnly to act as “that gatekeeper.”
When asked if its carbon-conscious returns model has ever been abused by serial returners who over-order and hope to keep goods, Synnott offered: “There have been some cases where customers try to abuse the policy, but it is extremely rare. We don’t let the actions of a few ruin the experience for most — including the Earth.”
Monk-Chipman calls for patience by businesses as “lockdown has divided the nation into either a fitness fanatic or couch potato,” leaving shoppers with little indication of their current size, citing a potential increase in size “bracketing” as shoppers try to land on their new fit, which many online retailers have supplemented with an array of fit technology. She echoes Synnott in that positive experiences drive loyalty, with customers self-regulating their sizing over time and “reducing their own rate of return.”
In McKinsey & Co.’s latest survey regarding consumer sentiment on sustainability, the pandemic is again referred to as a potential “reset opportunity,” with the shift to online shopping unlikely to reverse. How equipped are retailers to handle the sheer volume of returns expected, and what importance will technology play?
In a “horrendous last resort of retail,” Emily Cotterill, head of sustainability at ReBound, believes unprepared businesses may end up landfilling the anticipated surge in returns. She added: “To plan for excess and surplus stock caused by the global pandemic, we have been supporting our retailers’ reverse supply chains to ensure that returned items are kept in circulation. This includes exploring solutions for charitable donations, quality checks at return hubs and providing more data and insight to help understand what drives returns.”
As for ReBound’s own practices during the pandemic, the company remained fully operational, shifting easily from airfreight to sea freight — reducing its emissions by 36 percent in the U.S. alone.