Early Surge in Holiday Sales Equates to Spike in Returns. How an RMS Can Solve the Reverse Logistics Challenge

Through an end-to-end RMS, retail owners can establish more visibility, greater customer happiness and true brand loyalty.

Maridav Adobe Stock 369394275
Maridav AdobeStock_369394275

As we embark on the holiday season, we know there will be an uptick in shopping. However, some experts are forecasting that consumers will begin or have already begun shopping earlier than in previous years. There are likely several reasons for this, but one of those just might be due to the fact that the Consumer Price Index for all urban consumers jumped by 8.5% between July 2021 and July 2022, according to the U.S. Bureau of Labor Statistics reports. There are also product availability issues because of material shortages, which could be exacerbated by labor shortages in multiple industries.

Growing sales and returns

Despite inflation and the recent changes seen in the economy, the National Retail Federation (NRF) forecasts 2022 holiday shopping between November and December will grow by up to 8% as compared to 2021. That number is estimated to be as much as $960.4 billion. As consumers are trying to be better prepared for the holiday expenses, it’s not hard to theorize that increased purchases will also mean increased returns – maybe even more so because if people are paying more, they’re going to expect more.

During the 2020 holiday season, the NRF estimated that nearly 11% of the total U.S. retail sales were returned – an estimated $428 billion. Furthermore, one survey found that for every $1 billion in sales, retailers average about $106 million in merchandise returns. What this all amounts to is that retailers should begin preparing themselves right now. As they gear up front-end operations for the busy holiday season, they also must ensure that their reverse logistics processes are equally as efficient.

Returns are not simply spread evenly across all retail as some businesses are going to be hit harder than others. To that end, e-commerce businesses see a return rate of more than double a brick-and-mortar store. Either way, business owners will incur costs when it comes to returns because of warehouse space and equipment, manpower costs along with processing returns into inventory. Any retail organization can ensure a smooth experience from beginning to end by utilizing an end-to-end purpose-built, returns management system (RMS) with configurable and flexible workflow capabilities.

Perfecting returns and brand loyalty

The returns process is a great opportunity for retailers to engage further with customers, as it gives them more opportunities to enhance the customer’s overall experience. Most current returns processes make it a difficult experience for consumers, which can negatively affect customer relationships, a company’s brand, and its bottom line. By implementing an end-to-end RMS and optimizing the entire returns experience, business owners can be assured they are truly doing everything in their power to ensure consumers have a positive return experience. This is so important because studies show that it is one of the biggest factors in whether a customer will return to purchase from a brand again.

Integration and visibility with returns

Along with all the great benefits a business can reap from an end-to-end RMS, there’s also the ability for it to be integrated seamlessly with other solutions. It is ultimately a cloud-based SaaS solution that, with integration, manages an entire returns process while also providing important insights into consumer returns behavior and trends. Each system is uniquely based on the needs of each individual business, and every bit of analytics it provides allows companies to get ahead of any potential issues.

Furthermore, operations are always being updated to align with customer feedback, so it can ensure every single return is a positive and seamless experience. Integrating this type of RMS is a sure way to increase customer loyalty while also ensuring a business achieves a competitive edge.

Part of this integration also means giving consumers complete visibility into the returns process. When a customer makes a return, they ideally would like a refund as quickly as possible, but a company must drive efficiency and maintain standards across the entire returns journey. Typically, businesses will issue a refund when a returned product is received, it has been examined and found to be in satisfactory condition while the original purchase is verified. Alternatively, an end-to-end RMS can trigger a credit or refund at any point in the returns process, which can give companies added flexibility and increase customer satisfaction. The system can allow businesses to set different rules for different customers, but when the return is processed quickly, and the customer is credited faster, they will be happier with the overall experience and will become more inclined to show loyalty to the brand for years to come.

Tracking and analytics for the win

One of the biggest reasons companies have inefficient and costly returns processes is because they lack the data that can streamline and improve operations. Without that data, the problems can be hidden, and many of these fixable issues are left unresolved. An end-to-end RMS breaks open the proverbial black box of data through the gathering and delivery of real-time returns tracking and analytics. Those analytics can be viewed within every module, queue, and order. With complete visibility into this journey, companies can identify inefficiencies, eliminate the complexities and act on cost-saving and sustainability priorities.

Minimizing environmental impact

Consumers today are much more aware of sustainability initiatives within companies, and it’s an important detail to consider when it comes to showing customers how simple and sustainable a business can be throughout its returns processes.

Return shipping transportation creates the same emissions as more than 3 million cars each year, and worldwide, only 20% of discarded textiles are reused or recycled. As views shift on sustainability, businesses must be cognizant of the importance reverse logistics have on the environment.

A modern end-to-end RMS enables retailers to get items returned quickly back to stock and put back into inventory for resale in a quicker manner. It also deploys recovery efforts to minimize inventory waste, reducing the environmental and financial impact a return has by assisting with recycling, repackaging, and restocking. When it comes to recycling, strict limits for disposals can be created by standardizing the work across teams and locations, guaranteeing that returned items are processed consistently.

As we kick-off the holiday season, business owners everywhere are in a position to adjust their returns management processes to prepare themselves for the holiday surge. Through an end-to-end RMS, retail owners can establish more visibility, greater customer happiness and true brand loyalty.