Can Warehouse Management Software Help Solve the Returns Challenge?

E-commerce, S-commerce and M-commerce have opened a whole new world of possibilities for traditional bricks and mortar retailers. Selling online offers retailers countless advantages above and beyond the obvious ability to trade twenty-four hours a day, seven days a week, 365 days a year with access to a global audience of potential consumers.

New Opportunities = New Challenges

As well as the obvious opportunities, new markets or the routes to them, like selling online present new challenges. One of these is returns. Whilst not a new phenomenon – industries such as newspaper & magazine print have been tackling ‘reverse logistics’ for many years. It is widely acknowledged that ‘returns’ or how to manage them present a real challenge to online retailers. Why? Consider this if ‘Returns’ were a supplier they have rapidly become many retailers’ largest source of inbound goods. Whilst this is not necessarily a problem the high volume, high product mix combination of products does not help and to put it bluntly, they are arriving from perhaps most retailers most unruly and ill-disciplined. As online sales continue to rise – some experts predict up to 80% of retail sales could soon be made online, the likelihood is the volume of returns will also increase – it is currently running at about 30%. It has already been suggested most returned items are loss-making, so it should be no surprise to learn it is estimated returns are already costing retailers in Europe over £60 billion per year. Perhaps the most surprising statistic of all, however, is that nearly three quarters of companies that trade online have made no investment in technology to help address how they handle returns. So here is the question. what part can technology play in helping to address the widely predicted ‘returns tsunami?

Try-before-you-buy

Customers are returning more products than ever before This isn’t just because of the growth in popularity of online shopping IE. More online sales equal more returns. The percentage of products purchased online that are subsequently returned continues to increase.

This trend has been fueled by several factors – it may even have been encouraged by retailers themselves as they seek to improve the customer experience and enhance their service offering. ASOS, for example, introduced a ‘try-before-you-buy’ service, which lets customers try clothes on and return anything they don’t want before they are charged.

Intentional returning is a real and growing problem, particularly within fashion – apparently, online clothes parties are a thing. These see consumers photographing themselves in clothes they have purchased online posting said photographs to social media channels before returning the items to sender without any intention ever to purchase them. This is aside from more genuine reasons because product sizing is not always consistent, consumers may order the same item in multiple sizes with the intention of returning products that don’t fit. Whatever the customers intention the outcome is, of course, the same.

Whilst some retailers have altered their returns policy to try and clampdown on the most serious abuse. Amazon announced that it would start banning serial returners. Most retailers are in fact reluctant to restrict returns, in fact, there is even a thought that retailers should reward consumers for ensuring returns are timely and providing an insight into the reason for the return. After all, a good returns policy can be an edge in a competitive market.

The manual handling problem

The real issue regarding returns is not, of course, the simple inconvenience but the losses associated with them. Any profit made after the item has been despatched is quickly eroded if it is returned, a leading retailer recently claimed a pair of jeans may actually be sold 5 times before. In some cases, a return can double or triple processing fees, putting a significant squeeze on profits in a sector where margins are already tight.

One of the reasons why returns are so costly is because of the amount of manual handling involved. In 2016, the Financial Times reported that the average returned purchase has to pass through seven different people before it can be listed for resale. One fashion retailer reported that up to 75% of their labour focused on returns alone.

Warehouse management software, which controls warehouse operations like inventory management, picking and reverse logistics, have the potential to make the returns process more efficient by not just documenting but also directing the process.

Top warehouse management system tips for efficient returns

A 2018 report found that over two-thirds of retailers don’t use technology solutions to process returns. We thought this was worthy of exploration and we would like to share some top tips to make the returns process more efficient with the help of warehouse management software.

Develop a top returns team

When a product is returned, several tasks need to be completed before the item, whatever it is can be resold.

This process might involve multiple personnel across different teams determining what a product is and who returned it, checking the product for damage or faults before approving a refund for the customer. This is not to mention rework to return the product to a resalable state or absorbing it back into stock.

Why not request information in advance, as part of your returns process? Why is the item being returned, is it faulty? The wrong size or just not the right thing? Has it been opened or used? Having this information prior to the item or items arrival and having it labelled accordingly could help get the item to the right location in your warehouse faster reducing the number of touch points and by using a system-connected device to confirm receipt, checks have taken place can automate issuing a refund and marking the stock as pickable.

This technological solution leads to greater process efficiencies, thus reducing the associated costs and minimises the likelihood of errors.

Embrace cross-docking

Cross-docking is a common practice, in the world of logistics. When a company wants to put their goods in the hands of its customers in the shortest time possible. the practice of unloading incoming products and immediately despatching them on their onward journey with little or no storage in between fits the bill perfectly. It also offers an alternate methodology for the handling of returned goods.

If a company offers a small product range and receives a high volume of orders, then there is a strong possibility that a product will be ordered while it is being handled by returns. Instead of being transported from the returns bay to storage and then back to despatch, the product can simply go from returns to despatch.

When a new order comes in, a warehouse management system with the right features will be able to look up if the product is available in returns before it directs pickers into the main warehouse to collect the product.

Picking is one of the costliest and most time-consuming processes in a warehouse, so by eliminating an unnecessary movement, the warehouse management system can generate strong efficiency improvements.

Store returns in a rapid picking area

Usually, with goods-in, employees transport dozens or hundreds of products to storage at once. But when it comes to returns, an employee may be returning smaller numbers of ad-hoc products at a time to the storage racks. This in itself may be a less than efficient process, involving lots of undirected travelling and of course the location may be full.

In warehouses with a high number of returns, sending them all back to storage can be very time-consuming and costly. To minimise time spent putting returned stock away, warehouses can set up a rapid picking area close to the returns bay and despatch area, reducing time spent moving returned products.

When an order is received, a warehouse management system with the right features will identify if the ordered product is in the rapid picking area, before directing pickers to the rest of the warehouse. Using a rapid-picking area also means that stock can be identified as ‘in-stock’ faster and made ready for resale that bit sooner.

In warehouses and industries where cross-docking is impractical, a rapid picking area may be the most efficient way of getting returns back out to a new customer with the minimum number of contact points.

Is a WMS the solution?

Warehouse management software can’t stop customers abusing a returns policy or simply reduce the number of items returning a company thought they had seen the last of. However, in conjunction with some different thinking, it can make the returns process more efficient, provide useful data about what is being returned (and why) and perhaps most importantly help protect your bottom line.