More Efficient Returns Management in E-commerce and Omnichannel Fulfillment
January 12, 2021
Nowadays, consumers can get almost anything they want — whenever and wherever they want it. E-commerce and omnichannel shopping are booming. The COVID-19 pandemic has further fuelled these as safer sources of purchase. As online ordering options grow, expectations of your shopping experience are also increasing. "Digital consumers" expect fast order processing and delivery as well as customer-friendly returns processing. Studies show that 40–50 percent of customers consciously consider that they can return the goods when making a purchase. After Christmas, the number of returns is even higher. Gifts that do not fit or were not wanted are typically returned.
Returns are still a costly, mostly manual process for many retailers, which puts a considerable strain on margins. In addition to the shipping costs, there is the personnel and logistical effort required for inspection, preparation and returning to inventory. To avoid this complex handling process, there is an increasing tendency to throw away returns. This goes against the EU Waste Framework Directive, which includes provisions on waste prevention. The current German draft law, for example, proposes a duty of care for the handling returns with the aim of keeping returns in the goods cycle as much as possible. Further developments, in particular implementation in national laws and regulations, need to be monitored. It seems inevitable, however, that manufacturers and retailers will need to implement effective returns processing systems. Automation can significantly reduce the cost of these systems.
The complex aspects of apparel goods returns
As mentioned earlier, processing returns is currently mostly manual, especially for the fashion sector. Packages from the return shipment must be opened, the condition and resale quality of the items must be assessed, and they must be registered again without errors. Before items can be sold to another customer, it must be folded properly or put on hangers. In the near future most of these steps will not be possible without manual effort. In some areas, however, partial or even full automation is possible. For example, when re-packaging apparel, when setting up a facility for apparel with a high probability of resale that needs to be buffered (temporarily stored) or when the items need to be stored again for an indefinite period of time.
Based on the experiences of online retailers, there are four main reasons to automate processes:
- Consumers do not forgive a bad experience. While it is annoying to have a bad experience in an actual shop, consumers very quickly lose confidence if they do not get what they ordered online. No matter how reliable the workers are and even if they are supported by put-to-light systems for order picking, errors cannot be completely eliminated in manual operations.
- Manual order picking takes time. Consumers today expect immediate delivery when ordering on the Internet. With manual operation alone, fast order picking and packing cannot always be guaranteed. Retailers who at least partially automate storage and returns handling are able to process more parcels in less time — especially in large warehouses with long walkways.
- The lead time for sales is reduced. Statistics show that up to 80 percent of returned goods are highly likely to be reordered within 72 hours. An automated system for sorting and buffering to returning goods to inventory can save a great deal of time for the next order.
- Sufficient personnel can be hard to find. In many regions with distribution centres, comparatively few workers are available. Workers that can be found should be used for higher value tasks. In addition, the turnover rate for manual workers is usually quite high. Automation offers higher reliability with more consistent results over the long term.
Optimised returns handling for flat-packed and hanging goods in one system
The more online business grows, the more urgent an effective solution for returns management becomes. In this case, a pouch sortation system can be an ideal solution. Automated hanging systems are suitable for both flat-packed and hanging goods that fit into the suspended pouch or can be hung outside the pouch using a clothes hanger. The Dematic Pouch System accepts one item per pouch up to a size of 500x400x160 millimetres and a weight of 3 kilograms. The system can also be used without pouches. For example, items can be hung directly onto clothes hangers, which is particularly useful for delicate or easy-crease hanging garments.
Lubricants in systems for transporting apparel can damage items. Dematic does not use lubricants of any kind. Items are transported via a plastic chain system that does not need to be oiled or tensioned. A low-maintenance friction roller drive ensures reliability. The insertion of items into the pouches can also be automated if required. After the returns inspection, items can be packed in cartons again, foil-wrapped, labelled and placed automatically in the pouch as required. If an item is ordered again, it is automatically transported to the picking area, where it slides over the patented automatic pouch opening system and into the shipping box. Because of the modular design, throughput can be varied.
The future lies in automation
Nobody expects the rate of order returns to decline for online retail in the future, especially not for apparel in e-commerce and omnichannel fulfillment. For online retailers, efficient returns management is absolutely essential for consumer satisfaction and profitability.
Dematic designs, builds, and supports intelligent automated solutions empowering and sustaining the future of commerce for its customers in manufacturing, warehousing, and distribution. With research and development engineering centers, manufacturing facilities, and service centers located in more than 35 countries, the Dematic global network of over 11,000 employees has helped achieve approximately 8,000 worldwide customer installations for some of the world’s leading brands. Headquartered in Atlanta, Dematic is a member of KION Group, one of the world’s leading suppliers of industrial trucks and supply chain solutions.
This release and the information contained herein are for information purposes only and do not constitute a prospectus or an offer to sell or a solicitation of an offer to buy any securities in the United States or in any other jurisdiction. This release contains forward-looking statements that are subject to various risks and uncertainties. Future results could differ materially from those described in these forward-looking statements due to certain factors, for example, changes in business, economic, and competitive conditions (including with respect to further developments in relation to the COVID-19 pandemic), regulatory reforms, results of technical studies, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. We do not undertake any responsibility to update the forward-looking statements in this release.