Returned to Rack-Ready... in Less than a Day

When at least 30% of all products ordered online are sent back, it’s critical for retailers to have an efficient reverse-logistics process in place.

Returns. Retailers dread them because they eat away at profits and productivity. Customers love them because it turns the internet into a vast virtual fitting room. In fact, 67% of online shoppers check the return policy prior to making a purchase, and 80% of shoppers won’t make a purchase at all if returning it will be inconvenient.

Many retailers and wholesalers are experiencing increasing quantities of returned merchandise from their e-commerce sales. And that makes sense — in the US, e-commerce sales rose 300% between 2009 and 2019 — and returns rose right alongside those sales. Unfortunately, that also means retailers have that much more to lose from inefficient returns-management purchases. For retailers today, the need to reduce the amount of time and labor it takes to process returns, as well as the amount of floor space in the distribution center dedicated to returns processing is more critical than ever.

The First 24 Hours are Critical

The first 24 hours are the most critical in returns processing. If returned items can be processed and made “rack ready” within 24 hours of receipt at the distribution center, there’s a significant opportunity to increase overall sales volume and reduce the potential of holding returned inventory for a longer timeframe. If the returned item is a seasonal or fashion item, it’s all the more important to reduce holding time and get the item back into inventory for sale. So how do you improve your reverse logistics process?

Identify the Required Steps

First, identify the steps your team currently takes to fully execute your returns, from issuing the customer credit for the returned item, to fulfilling the exchange order, to making the returned item available for sale.

Simplify the Steps

Next, step back and look at those identified steps. Are the really all necessary? What can be cut, without negatively impacting the end result of getting the product back into inventory? How can you accelerate and streamline the steps?

Dedicate a Workspace for Each Step

Once the overall process has been simplified, dedicate a workstation for each specific function: credit/exchange, inspection, repairs/special services, and re-pack, for instance. These dedicated workstations can be connected by a conveyor network to further accelerate the workflow by efficiently moving the returned items from one function to the next. Automation can also be added to correctly sequence and synchronize the process, and interface with other automated functions that may exist within your warehouse, such as auto-baggers, storage and retrieval systems, picking areas, and so on.

A Well-Designed Returns System

A well-designed returns system minimizes the processing cycle time from receiving to sale-ready. Sales increase as items go back online faster. The customer receives credit for returned items immediately upon receipt/check-in and the exchanged order is re-entered into the system.

The entire process is more efficient, accurate, and organized. Defined workflows occur in specialized functional work zones to optimize labor productivity and improve operational effectiveness. An engineered returns system provides consistent and predictable performance, reducing the operating costs generated by reverse-logistics activities.

How One Retailer Handles Returns

Simplifying your returns process seems easy on paper, but how does it stand up to real life? For an apparel retailer who operates a high-volume distribution center, Dematic helped engineer an effective returns system that operates as follows:


First, the returned items are delivered to the credit workstation in a bulk bin or pallet box. For each item, the operator issues the appropriate credit to the customer, then places the returned item into the appropriate tote for the item’s final storage or shipping destination, such as flat, garment-on-hanger or third-party resale. Once filled, each tote is conveyed to the inspection workstation.


The operator at the inspection workstation removes the tote from the inbound conveyor and places it on their workstation’s shelf. One by one, the operator inspects each returned item and determines whether it’s approved for resale. The item is then sorted into the appropriate tote, and when full, the tote is placed on one of two conveyors: one leading to the automated storage system, and the other to a consolidation sorter.


For items that need to be re-packed into a bag for resale are placed onto an outbound “pace belt” conveyor that automatically inducts the item into the auto bagger, and then inducts it into a pouch system. At this point, the item is officially available for new and active customer orders.

Returned to Retail-Ready in Less than a Day


A returns system maximizes operational flexibility by effectively accommodating the daily and seasonal fluctuations in returns activity. The modular system design allows users to re-configure the layout and change software parameters to execute a new operating plan or to revise workflow strategies. Furthermore, automation can scale-up to increase processing capacity and speed.

Data sources:,

By Ken Ruehrdanz

An intralogistics insider for 40+ years. He’s seen it all, solved it all, and probably wrote a whitepaper about it. If supply-chain Jeopardy was a thing, he’d be the all-time winner.

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