Brian McDill, Norbert Dentressangle Logistics UK solutions and operations director, discusses how to make the most out of returns in a multichannel retailing environment

Brian McDill, Norbert Dentressangle Logistics UK solutions and operations director, discusses how to make the most out of returns in a multichannel retailing environment

On the High Street or on the internet, returns are a fact of retail life. No matter what, or how, you sell, people will want to return things.

By making the returns process simple and turning it into a straightforward, pleasant transaction rather than a chore, Brian McDill, who oversees Norbert Dentressangle’s distribution services, said retailers not only keep customers but encourage them to spread positive word-of-mouth about their business – a truly positive bottom line.

“When a customer returns a product, they want one thing – to get their money back with the minimum hassle,” he said. “In the interests of customer satisfaction, the retailer also wants to give them their money back with the minimum of hassle. Equally importantly, the retailer also wants a) to understand the reason for the return (in the context of their relationship with that customer) and b) to recover maximum value from the returned product.”

In order to achieve this, retailers need an IT system, which provides complete visibility of the customer’s transaction, McDill added.

Completing visibility loop

“When a product is returned, an effective returns management system must be capable of not only capturing the details of the return but, importantly, of linking this to information about the original purchase. This can include basic details such as store ID, date and time of purchase through to more detailed information such as details of local weather conditions and what else was selling at the time. This provides the retailer with a complete picture of the outbound and inbound transactions from which valuable management information can be extracted.

“On the High Street, in cases where the customer’s EPoS [electronic point-of-sale] system is capable of handling returns, an effective system will simply sit over the top and ‘tag’ information regarding the product and its condition to enable the efficient management of the reverse supply chain.

“In instances where the EPoS system handles only outbound transactions, the system should be capable of creating a ‘virtual’ transaction,” he added. “By capturing relevant details, i.e., client/returning store/date/return nature/value, etc., the system allows the retailer to gather detail both on the product and on the individual customer.”

Linking up online and in-store

McDill continued: “In the e-tail sector, where product is returned to a store, the system again links the returned product to the original online transaction. Alternatively, where product is returned via post or parcel carrier, customer and product information is captured on receipt at the returns handling point.

“While it is entirely possible for a web-based system to capture returns information further upstream, this places unwelcome responsibility on the consumer to supply this information and, for this reason, is not current practice. In the future, retailers may well take steps to incentivise customers to do just this, for example, by automatically crediting the value of the product to the customer in return for them completing an on-line returns form (allied to a mechanism for recovering this if the item is not received or is in unexpectedly poor condition).

“However, regardless of at what point in the supply chain this information is captured, the ability to link information about an item with information about a specific transaction and customer is invaluable.”

Engineering reverse supply

From a logistical perspective, the principal objective in the reverse supply chain is to minimise storage dwell time/speed up the recovery of value from returned product, thereby improving cashflow according to McDill. “Key to this is knowing as early as possible what is coming back and in what condition to allow a decision to be made regarding the appropriate disposition route. In most cases, this is either to return the product to stock or to ‘job it off’ through the secondary market.

“An effective system will capture information about returned product at both individual unit and individual store level which can be updated in real time, allowing the retailer to see exactly what they have, product condition, and where in the supply chain the inventory sits.

“This visibility has significant benefits in terms of both disposition value and inventory management. Details of product to be sold through the secondary market – for example, through an auction website – can be supplied to the relevant strategic partner and advertised on the site even before it has reached the returns handling point, thereby maximising the likely sales value. And, where the retailer has return to vendor agreements in place, a good returns management system is also an effective credit management tool, while reducing inventory in the supply chain.”

McDill concluded: “Through the adoption of appropriate technology and best practices in the reverse supply chain, it is possible for returns management to become an entirely cost neutral activity. On this basis, retailers can afford to be generous with their returns policies, helping to secure and grow their share of the market.”