CSCMP's Supply Chain Quarterly
December 14, 2019
Forward Thinking

Careful processes can generate profit from product returns, Geodis says

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The key is matching the right method to the right product, from food to smartphones to toys, 3PL says in CSCMP Edge session.

Retailers in nearly sector face the specter of handling a surge of product returns every peak holiday season, but smart processes can help them speed the process of getting those goods back on store shelves, and maybe even turn a profit while they're at it, third party logistics provider (3PL) Geodis said in a session held Monday at the CSCMP EDGE 2019 annual meeting in Anaheim.

U.S. consumers returned a whopping $369 billion in merchandise last year, and statistics show that 65% of that total was the retailer's fault, David Hauptman, Geodis' senior vice president for strategy, said in a session called "To Every Season, Return, Return, Return: Managing Your Warehouse Returns." Sloppy warehouse practices also trigger returns, including 20% due to damaged products, 22% when a delivered product looks different than the one shown on an e-commerce site, and 23% that are simply the wrong item, he said.

The best strategies for cutting those mistakes must be tuned to the precise type of product involved, he said. Handling returned food—whether gourmet Lindt chocolate or high-end Purina dog food—requires precise track and trace records, strict temperature controls, and a willingness to throw away 40% to 80% of the products, according to Geodis.

In contrast, at least 98% of returned consumer electronics such as iPhone smartphones can be refurbished and returned to active inventory within mere days by hiring well-trained technicians. And the great majority of returned Lego kit toys are suffering only from crumpled packaging, and can swiftly be reboxed or sold on a secondary market, Geodis said.

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