Reverse logistics of goods grow to new heights due to returns
Updated: Mar 28
The increased online purchasing rates in recent years, not surprisingly due to the Covid-19 situation, has caused a dramatic increase in the returned goods as well. USA digital purchases increased by 43.5% between 2019 and 2021. Goods returned by US consumers surged 78% in 2021 alone, turning a big focus to the “returns industry” and the balance between such aspects as its finance, customer service, and the quality of the environment.
It was expected that over the last two months of 2021, holiday season shoppers would return more than half (!) of their purchases, according to the NRF (The National Retail Federation), causing major dilemmas to retailers. Car spare parts, clothes and shoes as well as home appliances led all categories on the list of returned goods. But how do such data and the online conversations of customers tell retailers how to go on about such a phenomenon?
The business of reverse logistics covers the reuse of products, meaning moving goods from their typical final destination (customers who purchased them) for the purpose of capturing value (reselling them, for example) or proper disposal. When a customer sees a picture of a coat or shoes online and decides to buy them, he may be misled by their looks or size once they arrive at his home, and then decide to ship them back. Then there are also other types of shopping, such as bracketing, referring to a consumer buying multiple sizes or colors of a single item, choosing the version he likes best, and then sending the rest back to the retailer.
There are at least two more types of returned goods, ones that are based on fraud, which makes the issue of handling them even more complicated. There are shoppers who return used-but-not-damaged clothes for a refund. Then there are those who send back stolen clothes for a refund too. It is estimated that losses just from the purchase tax on fraudulent returns grew more than $5 billion in 2021.
Retailers find themselves having to deal with massive returns-logistics aspects, and therefore are employing outsourcing companies such as Optoro or GoTRG to handle such processes. However, the huge goods returns are creating retailers so many headaches, from environmental and financial aspects, that even the tireless work of the logistics companies can not always resolve the situation.
First, Optoro estimated that goods returned in 2021 created 2.6 billion kilograms of waste, hurting the environment immeasurably. And on the financial side, retailers and stores sometimes decide that since handling returns is so expensive, they are telling clients to keep the goods for themselves and are refunding them all the same. Ironically enough, that last act by itself contributes to building the consumers-retailers relationship. Shoppers generally have a positive sentiment for such retailers, as they save time and effort returning stuff. And the retailers are enjoying their sentiment growth with customers, as long as they don’t take advantage or fraud them in such a situation.
With such high volumes of goods bought online and returned, a deeper understanding not only of the financial and environmental aspects is called for. There are several major issues for companies to ponder, which relate not only to retailers but also to returns-logistics companies. They can keep researching the opinions of customers as are voiced in many different places online, then structure such data for actionable insights using Affogata. Topics to take a deep dive into may include further understanding of reasons why shoppers return goods as well as how customer service approached handling of such returns. Then there are overall customer services-related opinions which lead to sentiment analysis, ending with the contribution of such data to the overall company’s brand sentiment.
Also, as is with every other company’s team that may employ Affogata’s customer feedback data analysis, customer service actions may affect the entire company’s product decisions. Companies can also track and analyze lots of data on how their outsourcing of logistics work and in what areas they have to improve. Finally, when a company is obsessed with what its clients have to say about its brands, reps from the company can directly reply to those commenting customers in order to show that the company is responsive to their words, not only with action but with written replies too.