Global research from DHL Supply Chain has confirmed that the rising tide of returns, largely from eCommerce customers, is costing the earth. Literally. The erosion of margins, as well as the impact on the environment of waste and additional miles has, says Nabil Malouli, Senior VP e-commerce & Returns Global, DHL Supply Chain ‘reached a tipping point’.
The findings show that returns have increased by nearly 20% in the last two years, which is ‘driving concern about cost and environmental waste’.
While only 9% of in-store purchases are returned, a whopping 30% of online purchases are returned to or via warehouses. This could be due to several factors, ranging from free return policies to the fact that it’s difficult for consumers to know if they want to keep something without seeing the item or trying it on.
Regardless, these high return rates pose a significant issue for retailers. Returns handling processes that aren’t designed for the current large volumes are a major challenge and, according to DHL’s research, 17% of businesses are turning to disposal as their primary method for handling returned items that aren’t being restocked and sold.
Recent high inflation is causing concern and hastening the need for change. While the financial burden of returns is being felt more acutely due to global economic instability, environmental concern remains one of the main drivers for change. According to DHL’s research, a third of businesses stated they are already calculating the carbon emissions associated with returns and the same number plan to start doing so.
None of this comes as much of a surprise to warehouse operators, many of whom have transitioned to accommodate the e-commerce revolution, with efficient returns management as an important part of their valued-added service offering. Retailers often look to their 3PL partners for support in managing returns sustainably and cost-effectively, and the sector has duly stepped up.
DHL has stated that ‘sophisticated returns handling capabilities allow retailers to offer faster refunds, quickly restock across multiple channels, repair for resale, and recycle responsibly,’ adding that ‘enhancements like these have the potential to drive-up revenue and reduce waste, while also enhancing the overall customer experience.’
Warehouses operating in this space fully understand that principle and some have developed highly complex returns processes to meet their customers’ needs. One example is UKWA member Metro Supply Chain whose dedicated returns team manages warranty claims and repairs, as well as in-house testing by technical engineers for quality assurance, before returning goods to customers for vendors – just some of the items they repair are car seats, pushchairs and vacuum cleaners. As part of the same service, they also help their customers reclaim costs on returned goods through resale on global ecommerce platforms and, vitally, they have an eye on sustainability goals, helping customers reduce landfill with alternative disposal and recycling options where resale is not viable.
Successful management of returns is critical to modern supply chains, and warehouses are at the heart of that process. Warehouses are being called upon to provide a wider than ever range of activities, all of which heralds a pivotal role for warehousing in the circular economy of the future.
Clare Bottle
UKWA, CEO
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