Lars R. Dzedek, Global Head of Returns & Circularity at DHL Supply Chain
Peaks such as Black Friday, Christmas, or Chinese New Year are marked by intense sales periods and an increase in the volume of products purchased, which makes them major contributors to a business’ annual revenue. However, the months following these periods see a surge in returns, making it an equally critical phase that can define a business’ operational success, profitability, and customer satisfaction.
Returns can be costly, time-consuming and unpredictable, but by mastering this aspect of reverse logistics, businesses can turn potential headaches into opportunities for growth.
The increasing complexities and challenges
The rise of e-commerce and social commerce has transformed consumer behaviour, with the ability to easily return products and obtain a fast refund as the minimum expectation of the shopping experience. However, with this, comes greater complexity for retailers. The sheer volume of returns after peak sales periods can overwhelm even the most robust supply chains, cause operational strain and if not handled efficiently can erode the margins gained by the sales surge. Processing returns involves inspection, repair or refurbishment, repacking, and channelling towards reselling, recycling or disposal – all of which take time and resources. An inefficient returns process can not only impact inventory management and erode profit margins, but also lead to frustrated customers, affecting brand reputation.
As sustainability becomes a greater priority for consumers and governing bodies, businesses are also facing increasing pressure to minimise the environmental impact of returns, resulting from – for example – their returns transportation, packaging, or volumes ending up as waste.
Achieving seamless returns management
According to the National Retail Federation (NRF), a significant majority (76%) of shoppers consider free returns a crucial factor when choosing where to buy products, and 67% would be deterred from shopping at a retailer again if they had a negative return experience. This demonstrates the importance of optimising the returns process to maintain customer loyalty while avoiding placing stress on the supply chain.
Effective returns management means having the infrastructure and resources to a) streamline processes, b) leverage automation in the warehouse, as well as for communications between teams and customers.
As eCommerce continues to grow, we’re committed at DHL to helping customers at each stage of the process, and returns and circularity are a key part of this. Our solutions aim to address both the increasing demand and complexities around returns management and evolving circular business models. This not only covers warehouse operations of inspection, repair, or refurbishment, but also includes aspects such as inbound transport, drop-off networks, re-commerce, or recycling and waste management. Predictive analytics are also used to anticipate return volumes to allocate resources more effectively. Ultimately, the goal is to give end-consumers a great returns experience, provide scalable and cost-effective returns solutions, and maximise resource reuse.
Prioritising reverse logistics
With the continued growth of e-commerce returns, and tightening legislations around circular economy, businesses are increasingly recognising the strategic importance of reverse logistics – be it to drive their brand reputation and customer retention, improve their bottom lines, or enhance their environmental footprint. The demand for robust returns has never been greater and the ability to manage post-peak returns effectively will undoubtedly be a defining factor in the success of any ecommerce business.
