Reverse logistics is the next thing for tech to tackle

Technology has and will continue to be a disruptive force in many industries. Many offline industries are already restructuring to take advantage of the online craze and why not, technology provides opportunitiesto increase efficiency, expand market reach, and improve sales. However, despite these seemingly obvious benefits, there are some sectors that are yet to fully integrate the use of technology in their operations.

There is one area though that we find very interesting – and that is reverse logistics. Retailers these days have to deal with an enormous amount of returned goods and excess merchandise. This is one area that has pushed back technology massively. Although retailers are selling online and executing most of their sales through the internet, handling of returned goods has often been manual at best. They even have to do a reverse address research.

When you consider that in 2015 alone merchandise worth $260 billion was returned, there is enough justification to streamline this area by enhancing technology adoption.And that is not all. It is estimated that e-commerce returns in North America have been growing by at least 15% each year. The sad thing about all this is that even with these massive ratesof return, most of the merchandise that comesback does not end up on shelves. It just lies in a warehouse somewhere waiting for the nextcourse of action. This increases operational costs for these retailers massively.

There is no doubt that handling return inventory can be challenging. This is easily one of the most logistically challenging processes. However, we believe that technology is the answer. After all, it won’t be the first time that technology will bring efficiency in an otherwise inefficient and logistically challenging process.

The biggest challenge though is education. Considering that this is how retailers have done things for years, it would be very difficult to make them see the value of incorporating technology in this area.It will also be hard to educate them on how to use the technology.

But it’s not all bad news. Over the last few years, we have seen a gradual entry of technology into this age-old industry. For example, we have seen SaaSinventory management solutionsthat use data to determine the ideal channel for a product once it’sreturned and taken to the warehouse. The systems can decide to refurbish, liquidate, reroute, or scrap the merchandise. Because it’s an automated process, retailers are able to efficiently and quickly process and track items.

We are also seeing apps designed to help retailers manage online returns.Returnly and Shyp are some of the apps currently being used in the market. Returnly basically facilitates product returns and ensures that the customer gets an instant refund. Shyp, on the other hand, helps customers who want to return items compare shipping options.

Retailers are also exploring technology to sell items that are planned for liquidation. The items are sold through online auctions. The advantage with this is that the retailer will increase liquidation sales and at the same time engage directly with consumers. And because everything is done online, the costs are significantly low. Handling returns is definitely a logistical nightmare for many retailers. However, technology solutions exist. The only thing needed now is a quicker adoption.


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