In retail, stock returns have always been a fact of life – they come with the territory. But, in recent years, the exponential growth of e-commerce, busy lifestyles and new shopping trends have seen a dramatic rise in apparel returns in particular, causing pick bin challenges for retailers.
Reverse logistics has become big business, as retailers and the 3PLs that serve them strive to meet customer expectations for fast, free, easy stock returns. Maintaining agility and speed required by today’s time-poor shoppers faced with infinite choice can be difficult to sustain when warehouse storage space is stretched, and storage bins are at capacity.
Q1 of each calendar year tests supply chains, as returns peak and unwanted Christmas gifts gain momentum. Longer returns windows impact on warehouses more geared up for packing and dispatch than returns and rework. Planning for the flexibility to adjust to these fluctuations in stock can be a challenge but can be met head on if the correct picking and storage bin solution is implemented.
The rise in apparel returns
Global e-commerce retail sales reached 5.2 trillion US dollars (£4.4 trillion) in 2021 and are expected to rise as high as 8.1 trillion (£6.8 trillion) by 2026.
Online shopping has fuelled new consumer habits – especially in apparel – including the rise of so-called ‘bracketing’, where buyers deliberately order several sizes or colours of items, intending to try them on at home and then return the ones they don’t want.
With an estimated 35% of consumers now regularly shopping for clothes in this way, it’s not hard to see why the return rate for online purchases is around 30%, compared to 9% for purchases made in stores.
With up to half of clothing bought online returned to some retailers, the whole process is estimated to cost businesses a combined total of around £7 billion a year, according to a 2020 study by consultancy KPMG.
About 80% of returned clothing may be resold without significant work, perhaps requiring a steam clean or simply just new packaging. Of the remainder, many items can be reprocessed, but around 5% are likely to be deemed unfit for resale, either due to damage or for hygiene reasons.
However, before retailers get to the point of making a decision about what work may or may not be required to return an item to the shelf, the very fact that item has been returned will already have necessitated an investment of significant time, money and effort.
The reverse logistics challenges
The process of receiving and processing a return can be lengthy, involving multiple handlers, flexible storage bins and fraught with potential for things to go wrong. Add to that the fact that it is impossible to know what condition items will be in until they arrive back at the warehouse (and that all your customers see is the time it takes for a refund to hit their bank account), and it’s not difficult to see why returns is such a tricky area for retailers. 3PLs are under pressure to fulfil this service in a timely and cost-efficient manner, utilising warehouse space both efficiently and effectively.
Most reverse logistics operations involve a digital interface, a last-mile carrier to pick up the product, a forwarder and a warehouse equipped for verification and restocking. If these are not well co-ordinated, it can lead to delays.
Disorganised warehouse space – where returns and rework are carried out in small, cramped spaces and where there is a lack of properly organised storage bins– will be less efficient and are more likely to make picking mistakes.
With a retailer’s returns process now an important consideration in shoppers’ decision to purchase, a negative experience may stop many people from buying from a business again.
It may also cost more in the long run, especially in the case of fast fashion, where every minute spent off the shelf could mean a lost sale.
A straightforward returns process, on the other hand, can be a competitive advantage in a crowded marketplace.
Overcoming challenges in apparel returns
So, good returns management is good business. But effective reverse logistics requires overcoming significant challenges. These include:
A lack of proper industrial warehouse space dedicated to returns and rework
Not enough storage bins for returns yet to be processed, as well as those that are ready to be returned to the retailer
Poor stock organization and management of returns in progress
Reduced availability of labor
An ineffective or incomplete returns inventory management system
Poor communication between supply chain partners and the customer.
The good news is that these challenges are by no means insurmountable, and the financial and reputational rewards for those that get it right are potentially huge.
A good digital inventory management system for returns allows incoming returned orders to be verified and effectively allocated for inspection then repairs, redelivery or removal from inventory as may be necessary. Implementing such a system makes for a more efficient, streamlined process and improves communication between supply chain partners, and with the customer.
Meanwhile, proper organisation and management of warehousing storage space (think ergonomically designed pick faces, dedicated rework areas and flexible warehouse storage bins that make maximum use of space) will improve pick accuracy and speed of returns processing as well as reduce the labour intensity of the task.
PALLITE®: Warehouse storage for reverse logistics
At PALLITE® Group, we specialise in helping businesses overcome challenges to boost pick efficiency and drive profitability.
Our PIX® and PIX® SLOTS sustainable warehouse storage solutions help logistics and reverse logistics operators to pick, pack and despatch items more quickly and with improved picking accuracy.
Our storage bin pick faces can be quickly and easily flexed to fit different products, allowing warehouse managers to maximize their storage space when they need it most. Dividers can be removed for increased pick bin capacity, Multipliers can be inserted do double or even triple the number of pick faces available per storage unit. They also come with a host of features as standard that allow for improved warehouse storage organization, including dedicated shelf space for labels and barcodes and the option of rearward angled shelves and shelf lips to help with stock retention.