With the rise of ecommerce, retailers and distributors have had to deal with a significant upswing in the opposite end of the transaction as well: returns. How can the right technology help you mitigate the challenges of ecommerce returns and use this to build goodwill with customers? Let’s take a look!
Why You Need the Right ERP System
Enterprise resource planning (ERP) systems are usually the backbone of manufacturing and distribution organizations. How successfully a company integrates its ERP systems into their existing processes can completely influence the strategy and rate of success in future years.
Even though ERP usage is widespread in many companies these days, there are still many challenges that come with the implementation and ongoing maintenance of these systems. One such conundrum are the ever-occurring returns that ecommerce retailers have to deal with, which can create nightmares for accounting, logistics, and storage team members. When the right tools are in place, everything gets a little easier. But, how do you go about finding those tools and ensuring your workplace is set up for success, even when products start coming back?
Meeting Consumer Expectations
With the growth of ecommerce, consumers’ expectations have changed. They expect quick shipping and demand to be able to return their items if they’re dissatisfied. While ecommerce sales show no signs of abating, the reversal of the flow of goods is increasing. Ecommerce distributors have to handle the sustained flood of ecommerce returns while avoiding the hurdles and challenges that come with their industries. This can be tricky, and if you don’t know the pitfalls to watch for, you won’t know how to solve them.
Here are four retail return challenges that can help you make the most of your efforts using the right ERP system:
1. Conditioning Items for Resale
When someone sends an item back, the receiving company often asks for the reason the product is being returned. If someone just says “defective,” there’s not really much information to go on; however, a little investigative work can go a long way in these scenarios. For example, is has the box even been opened? If not, you can probably resell it as new. If it’s been opened, you might be able to resell it as like-new or possibly used. This will help you make the most of your inventory so you’re not just throwing items away that could make you money. Of course, you need a way to track this inventory that’s coming back, as well as the condition it’s in, which is why you need a great ERP system.
Even if you can correctly verify the condition of an item, you may not be fully capable of reselling it. Many retailers lack the applicable channels necessary to reshelve and resell their items. In many cases, returned items just collect dust on stockroom shelves. However, if you’re able to inventory, classify, and categorize incoming returns in an organized fashion, you can still make money on those returned items.
2. Obsolescence in Liquidation
If you’ve acquired a substantial amount of returned inventory, you might decide to sell off the whole lot. Bear in mind that when this step happens, the merchandise you’ve accumulated might be obsolete. Electronics are a great example; if you’re one or two generations removed from the current version, you’ll have a hard time moving your stock.
When you’re trying to salvage what little value is still possible, you might still need to liquidate everything for prices substantially below what you’re expecting. If you had the right tools set up in the first place, you could have avoided this conundrum and eliminated the problem of lost value on the property you’re trying to rehome.
This is why an inventory management system is incredibly imperative to the lifeline of all manufacturing and distribution systems. Not only do ERP systems allow you to track the inventory that hasn’t yet gone out to consumers, but it allows you to see what returns you have in stock so you can make decisions about reselling them before you have an overstock of inventory built up that you have to deal with.
3. Setting Optimal Policies for Ecommerce Returns
To battle the rising return rate, many retailers have turned to tightening the policies they have in place as they relate to product returns. If you’re considering this, it’s important to note that stricter return policies can have a negative impact on consumer loyalty. Though it may not seem intuitive on the surface, adaptable return policies actually contribute to greater consumer devotion.
Flexible policies give customers freedom; on the other hand, strict policies make people feel threatened, which can decrease custom retention. As long as your returns process is smooth and hassle-free, you’re more likely to gain trust, engagement, and loyalty from your customers. However, you have to have systems in place to deal with that flexibility and the returns that are likely to come along with those decisions.
4. Lost Warehouse Efficiency
The volatility of ecommerce returns can often make warehouse operations more complex and complicated. Normal handling processes are transformed into difficult situations that involve multiple systems and team members getting involved. Thus, per-item handling costs in the reverse supply chain can run quite high. Costs rise even further when they’re paired with the conditioning and resale challenges we’ve already spoken about.
This is where modernized workflows and processing structures enter the picture. They can be enormous time- and money-savers for ecommerce operations. However, if you don’t have the right technology in place, your organization will be hard-pressed to regain the maximum value from returned products.
MIBAR to the Rescue
Ecommerce returns present numerous challenges that make it difficult for associated companies to recover a return on their investments. With that said, there is positive news. The evolution of buyers’ preferences has spawned lots of originality in the once-quiet space of ecommerce returns. New supply chain tools are coming on the market every day to help ecommerce companies manage their returns with ease.
When you work with MIBAR, we can help you set up a modern, all-inclusive reverse logistics platform that gives you insight into your reverse supply chain. Our tools will help you achieve higher recovery value for distressed inventory because you’ll be able to resell it on specialized channels. Additionally, you’ll enjoy an increase in warehouse efficiency and handling of returned goods. Reach out to us! We look forward to hearing from you!
Learn how MIBAR helped JAM Paper go from “The Best NYC Paper Store” to an Internet Retailer Top 1000 ecommerce player and key player on online marketplaces: watch the webinar now.
Additional Ecommerce Resources
From Bricks to Clicks—One Company’s Journey from “The Best NYC Paper Store” to International eCommerce Player
Regional to National: How Ecommerce Opens New Markets for Distribution