Fashion fulfilment centres continue to face a significant increase in the rate of returns as omnichannel shopping becomes more and more prevalent. But while it represents a pain point for many fashion logistics companies, within the challenge of returns lies opportunity.
In this article, we explore how logistics facilities can start to reduce handling costs and create a value chain from returns.
The challenge that fashion logistics operators face with the overwhelming number of returns is well known. Studies have estimated that return rates may exceed 60 percent for e-commerce fashion retailers.
For the fashion warehouse, this ‘returns culture’ poses many challenges:
Altogether, these challenges mean a third of fashion logistics operations is now spent on handling returns and that handling costs have substantially increased.
In a world where the growth in fashion e-commerce is not going to slow down and where a returns policy is essential to retaining customers, how can fashion logistics companies respond to the challenges involved in reverse logistics?
There are a couple of solutions that fashion logistics businesses can explore:
At a traditional warehouse, one of the key challenges involved in handling returns is the many steps involved in the process, as illustrated below by the number of manual touches needed to handle returns.
An illustration of the process and number of interventions involved in handling returns without pouch sorter technology.
But what if the logistics centre could reduce some of the process steps and remove many of the touches? Not only would the centre reduce the need for manual labour, but also the time in which the returns could be made available again.
An illustration of the reduction in processes and number of interventions involved in handling returns using pouch sorter technology.
That’s where the pouch (or pocket) sorter system comes into play. This specialised e-commerce fulfilment technology is able to transport, sort, sequence and store both outbound and returned items. As such, it can simplify and streamline a number of steps in e-commerce fulfilment in general.
Pouch technology eases the handling of returns by placing each item directly into a pouch rather than sending it back to the shelf or regular storage, where it has to be picked again if it is ordered.
The pouch system serves as an intermediate buffer for return items typically resold within three days. Returns needed to fulfil an order are automatically retrieved from the dynamic buffer and sent to sortation.
Only items unsold after a few days are returned to shelf storage – or shipped for recycling – as part of an automatic, easy housekeeping process run during low-throughput periods.
Even these unsold items can be sorted to any required criteria. For example, all pieces of an unsold SKU can be consolidated at a packing station, placed in a tote or carton, and returned to storage as a single-SKU unit.
In this way, the pouch system dramatically reduces the cost of handling returns; the fewer times an item is touched – and the shorter and cleaner the process – the more value the item retains.
If fashion distributors can capture the potential benefits of returns, they may even start to maximise their recovery rates on returns. By taking advantage of a high-end automated sortation system, for example, it is possible for fashion distributors to create a value chain from returns.
The value of automated sortation is that it can be highly accurate. It can achieve finer sorting that would typically take significant labour and time. For example, once the distribution facility has handled the initial receipt of the returns, the automated system can sort items into individual SKU master packs or gaylords destined for the next market segment. Large, heavy items can be sorted to the bottom first, followed by medium items, then lighter items on top.
With this type of sortation, the facility knows exactly what’s in every package. If it opts to on-sell its returns on the secondary market, it can achieve a higher value because of the way they have been sorted, segmented and treated.
Instead of returns being a loss, this higher-level sortation can create a value chain within the supply chain. Fashion distributors can realise the hidden opportunities in reverse logistics and make more from reselling returns.
Logistics companies in today’s fashion e-commerce environment could potentially reach the point of ‘no returns’ if they find ways to adjust and ameliorate their returns management. Pouch sorter technology can reduce the touches and the manual intervention typically needed in the returns process, refining the process and significantly reducing costs. Fashion distribution facilities can even design their sortation processes to recapture value and uncover the hidden potential of returned assets.
