Returns are a notorious problem with online shopping. But over 75 percent of companies surveyed by ReverseLogix don’t actually know how much those returns costing, according to the company’s new study.
The returns management system (RMS) provider’s 2023 Reverse Logistics Technology Study, conducted by Peerless Research Group, surveyed 136 companies involved in the purchase of materials handling equipment or products, technologies and services in the business-to-business (B2B) and hybrid B2B and business-to-consumer (B2C) spaces with the goal of better understanding the return process and reverse logistics.
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The report found that 66 percent of respondents—12 percent of which are in the apparel or textile sector—processed their own product returns. In comparison, 16 percent said they use third-party logistics (3PL) to process returns and 18 percent said they aren’t involved in processing returns. Among those that process their own returns, just over half (52 percent) collect returns at their own stores, whereas 33 percent trust mailing to a central processing facility, 25 percent utilize pick-up and drop-off points and 21 percent rely on third-party locations. Throughout the course of the year, these companies are accepting over 250,000 returns at these various collection points.
The biggest pain points respondents identified regarding reverse logistics included the time required to process returns (36 percent agreed), slow or manual tasks to complete returns (36 percent), diverting staff from normal warehouse operations (33 percent), lost revenue from returned purchases or due to hiring additional staff (33 percent) and the ability to resell returned merchandise with ease (33 percent), among other challenges.
Only 24 percent of respondents said they use automation during any stage of the return process.
“The survey revealed that automation isn’t widely used for returns management, but automation could solve a lot of the respondents’ challenges,” Gaurav Saran, CEO of ReverseLogix, said. “Purpose-built returns technology can guide and automate tasks based on a company’s rules and standards, so even complicated returns can be processed faster. Plus, the visibility into incoming returns helps warehouse managers staff up before the items arrive.”
Of that 24 percent of surveyed companies, they’re using automation in various stages of the return process, including during reception of the package (34 percent), at unpacking (12 percent), at inspection (67 percent), when sorting for dispatch (33 percent) and when moving to an item to its final destination (65 percent), such as being put back in stock, recycled, send back to the vendor, or moved to a rework or refurbish specialist.
For the companies that use a 3PL to process e-commerce returns, the primary reason for doing so (and not handling returns themselves) was for the flexibility (65 percent), the resources (47 percent) and the cost efficiencies (41 percent). Only 29 percent of respondents said they wished they were handling returns themselves.
“Although a minority of respondents use a 3PL for returns, those that do use a 3PL find a lot of value in the partnership,” Saran said. “Return services are a huge opportunity for 3PLs because it differentiates them and meets a growing, urgent need among their customers.”
Whether these companies use 3PL or not, 77 percent of respondents said they don’t know the total cost of returns annually—but Saran sees this as a chance for progress.
“Without a returns management system tracking the entire lifecycle of a return, a company can’t accurately measure—or improve—what returns actually cost them,” he said. “As B2B and B2C consumers continue demanding easy returns processes, those that have returns technology to track and measure costs will efficiently balance customer service with the bottom line.”
