A year ago, 16% of holiday shopping purchases were returned, according to data from Salesforce. With many Christmas 2023 purchases still within a returnable timeframe today, Salesforce anticipates a returns “tsunami” that could strain the logistics industry, most notably 3PLs that service consumer-focused brands.
Salesforce data found that returns after Cyber Weekend (Thanksgiving to Cyber Monday) doubled compared to the previous year. The software vendor predicts more than $131 billion in holiday purchases will be returned this season.
Returns aren’t just the headache of the consumer and the retailer they purchased from. Unless an efficient returns system is in place, these returns can fill warehouses and landfills. Reverse logistics, the process of getting returns from consumer to the retailer is getting more attention from the trucking industry.
It's a retailer problem that could use a fleet solution.
See also: Reverse logistics: A problem that fleets can help solve
The impact on fleets
“Truckers probably—I think—have it worse than even the fulfillment partner or the retailer (with reverse logistics) because it's the most inefficient shipment you can have,” Kate Terry, CCO of Outerspace, a high-touch 3PL provider, told FleetOwner.
As Terry explained, there are different levels of shipping efficiency. Truckload shipping to big box stores is efficient, she said, because hundreds of items are packed onto a truck and dropped off at the same location. Less-than-truckload deliveries can be less efficient, but LTL carriers have streamlined shipping along the last mile to get goods from warehouses and distribution centers to consumers. This is efficient because multiple packages are loaded onto a truck, and deliveries occur within a specific area.
But the process of getting those returned goods back lies the web that must be untangled.
“The least efficient is picking up (return packages) from ... a UPS location or USPS,” Terry said. “The amount of packages that come out of one little USPS or one little UPS in my zip code is not a lot. It's not a lot of consolidation happening there, so that's the part that's super inefficient.”
Terry thinks fleets can play a part in solving the consolidation conundrum by offering their services–or even their perspective.
Logistics’ consolidation conundrum
Is consolidating return shipments the key to decreasing waste, lost revenue, and bottlenecks in the reverse logistics process? Perhaps, but consolidating returned goods is easier said than done.
“For the retailer to be able to collect up all the returns that they have and get them back to a central location, and then get them redistributed out to stores, that's a huge logistical challenge,” Mark Delaney, VP of retail industry strategy at Fourkites, told FleetOwner. “It's also aggravated by the fact that everyone uses different ways to return.”
Consumers and retailers both have many ways to return products. Consumers can return items at brick-and-mortar stores, drop them off at a USPS or UPS, or take the item to partner stores. E-commerce giant Amazon (No. 6 on the FleetOwner 500: Private), for example, partnered with Kohl’s as a return item drop-off location. There are numerous possibilities.
Most retailers partner with shipping companies to provide a painless return process for the consumer using prepaid labels, Terry told FleetOwner, which limits consumer return options.
These choices are inefficient and fragmented; it simply sends returns and the associated headaches to another facility with no clear resale or end-of-life path in mind.
“There seems to be a lack of a clear-cut strategy from the retailer C-Suite in terms of ... who owns the problem and who owns the challenge,” Delaney said. “I think until you get to that sort of C-level ownership of the problem, (reverse logistics is) going to continue to be a very fragmented market.”
Returns require labor
If retailers find a way to consolidate items for a truckload shipment, there’s the labor issue.
“If a return comes back into a central location, let's just say it's a distribution center somewhere,” Delaney said, “you've got to have people physically going through those returns to understand if it is sellable or if something is wrong with it.”
This is where high-touch 3PLs, like Outerspace, shine.
Companies use Outerspace to ship their goods, often mid- to high-end items, with “value-added services,” Terry explained. These services might include steaming or folding apparel before packing it into specialty boxes, wrapping the item in tissue paper, or packing the item in a special way because “that’s part of their brand promise.”
Companies that employ Outerspace have a better handle on their reverse logistics process because Outerspace has the labor to sort, inspect, and refurbish each return for resale.
Many brands and big retail establishments prefer to ship things as “one to many,” having “one strategy” for all the items they sell, Terry said. In logistics—either forward or reverse—efficiency is vital, which is why this strategy is also more economical, as most items don’t require special packaging or—if apparel—steaming. The one-strategy establishments omit personal touches for high efficiency and cost savings.
But this strategy causes a bit more headache during the returns process. These one-strategy retailers don't always have the labor to process returns that require sorting and inspection, as Delaney mentioned.
Finding a fleet solution to reverse logistics
Back in October, Blue Yonder, a supply chain solutions provider, announced it is acquiring Doddle, a first- and last-mile technology business, to offer “full-circle expertise encompassing final mile, returns management, and reverse logistics solutions,” the company stated in a press release. Delaney said acquisitions and moves like this, along with UPS’s acquisition of Happy Returns, signal that companies could see reverse logistics as “a big issue” for 2024.
Delaney told FleetOwner that, from a logistics point of view, retailers will not be able to tackle reverse logistics on their own, and it’s up to the retailers and fleets to come together to continue discussing a solution.
Terry believes it would be worthwhile for fleets looking to pick up extra loads and help solve the problem to reach out to retailers and offer that logistics solution or to at least offer perspective from the trucking side on how the problem can be solved, specifically with how those returns can be consolidated.
See also: Fleets can find opportunities as reverse logistics costs and waste pile up
In Delaney’s perfect world, fleets would help retailers figure out a “streamlined way” to get return items back to a distribution center, consolidated, and “ideally back to the store shelf within a reasonable amount of time.”
The road to fewer returned goods in landfills and filling up warehouses will be a long one, but with retailers and fleet companies working together, perhaps additional solutions can be found before the next holiday season.
