Services Sectors Our Platform Blog / News Company HomeBlogHow e-commerce reverse logistics might lead the transformation of the high street 13.04.21 Third Party Logistics How e-commerce reverse logistics might lead the transformation of the high street To our knowledge, nobody has tracked an individual clothing item to see how many times it was bought and returned until it found a forever home. And we might never know what the fulfilment and returns picture was before the COVID-19 lockdown, because, with the increase in e-commerce purchases, this consumer behaviour has also likely increased for some brands. It begs the question: how are brands managing the stress of more returns on their reverse logistics? And, in addition, how might this lead to a transformation of a struggling high street? Reverse logistics in ‘normal’ times Selling clothing online means you need a robust returns strategy. Unable to try items on before they buy, customers might order several different sizes or colours, and will order a wider range of styles to see what suits them. The majority of these purchases will be returned and the customer will be refunded. Reverse logistics is the exactly that – the same process as despatch and fulfilment, only in reverse: Packaged back up by the customer Handed over to a carrier Scanned into the fulfilment system for tracking Quality control checked upon arrival at the warehouse Repackaged Made available for resale ASAP Brands will have made certain their returns policies were robust enough to minimise these risks. Then lockdown happened. Many e-commerce retailers – especially smaller ones – have struggled with fulfilment because carriers have been overwhelmed, cardboard boxes and other packaging have been in high demand. Lockdown returns Interestingly, ASOS reported that its customers’ behaviour had changed during lockdown and returns had decreased. Sales were boosted by leisure and sports wear and cosmetics; stretchy and loose leisure wear has a more forgiving fit so it’s feasible this has affected the returns trend (though the company says not). ASOS also reported a 24% increase in customers and an annual leap in profits from £30.1m to £106.4m, indicating people are spending more. This snapshot of a single brand won’t be the same story for everyone. Though, if it’s true, how will this change as lockdown eases and people don tailored clothes again? What do brands need from reverse logistics? Many clothing brands encourage sales by providing seamlessly simple ways for customers to make returns. This usually takes the form of: A free postage label or carrier collection Packaging that can be resealed and reused An agreed timeframe for refunds Returns are costly for brands, though, once you take in all the steps required to receive an item back, quality check it and get it back on sale as quickly as possible. It doesn’t only impact on fulfilment logistics, it can affect cash flow – for smaller retainers, this can pinch. And the system is open to abuse. Efficiency is paramount The key to a robust reverse logistics strategy is a framework that facilitates and enhances efficiency. A 3PL fulfilment system should: Be able to provide you with exactly the same detailed information about a returning item as it does for an item that has been despatched. Include MI that allows forecasting, so you can adjust resources when necessary. Allow for visibility of the full range of stages and options of a return, including quality checks that pass (condition as despatched) or fail (customer has removed labels, damaged the item, not followed the returns procedure). As is clear above, reverse logistics, like despatch, isn’t just about the technological framework, but about the experience of skilled workers who will quality check and repack the items ready for resale. The ability to quickly and accurately complete the process, with great attention to detail, is worth its weight in gold. Well, almost. But an efficient team absolutely brings down the cost burden of the return. Split your resources for maximum benefit SCOPe’s warehousing management system allows for the efficient fulfilment of orders as well as returns. We can do both, but honestly, sometimes it’s better if the third party logistics company that handles your despatch doesn’t handle your returns too. Splitting despatch and returns allows you more flexibility. A 3PL partner will always prioritise outbound items over returns – this is as it should be, though in the event you need to get items back on sale quickly to minimise cash flow stress, it’s not ideal. You almost want to resell items before you have to refund the original customer, which demands experienced resources who can process the returned item quickly and get it back in the warehouse. The clothing sector feels this most, but almost any business in any sector will be impacted if their reverse logistics strategy isn’t working efficiently. How might e-commerce reverse logistics lead a high street transformation? It’s no secret that high street retail is struggling. It was before the pandemic and lockdown has accelerated the demise of many of our favourite stores. Customers will always like the experience of trying on outfits – in fact, the experience of holding any item in their hands before their purchase. But habits have changed in favour of e-commerce and an occasional shopping trip treat might just become that – an occasional treat. The high street needs to adopt different ways to attract people. One way might be to address reverse logistics and ‘experiential’ shopping, consolidating it with the convenience of buying online. Delivery hub changing rooms Perhaps customers who want to try on different sizes and different colours can ‘order’ multiple items – as many as they like – in advance of a trip. They visit a delivery hub in the town centre and their orders are waiting for them. They can try them on and choose their purchases, and only pay when they make their final choice. The beauty of this is that they can leave their rejected items at the hub, where they can be picked up and returned to circulation more quickly: less stress on cash flow and resource, lowers costs for returns. Slick and efficient is good for business. And it’s possible that, using bulk deliveries serving multiple customers of multiple brands, this would cut down the environmental cost of deliveries to (and collections from) individual addresses. It could help brands meet their environmental targets. An efficient 3PL partner has a hand in this process, of course, as well as the carrier. 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