The growing omni-channel returns and services issues The E-Commerce and loT Effects and the Impact of the consumer purchase and delivery experience.

1. The E-Commerce Hangover:
Returns and Reverse Logistics
Presented By:
Tony Sciarrotta, Executive Director
The Reverse Logistics Association
August 22, 2018
www.ApparelTextileSourcing.com/canada/

2. 1
Overview
Make it easy for people to shop online, and oh, they
will… then they will return 25-35% of sales vs. 8-9% in
actual stores.
In this session with the RLA, we will discuss:
1. The growing omni-channel returns and service issues
2. The E-Commerce and IoT Effects
3. Impact of the consumer purchase and delivery experience

3. 2
www.reverselogisticstrends.com

4. 3
www.reverselogisticstrends.com
RLA Memberships RLA Monthly Industry Committees
RLA Events RL News

5. 4
Market Trends

6. 5
Market Need
•Distribution Efficiency
• Receiving & shipping – labor-intensive / non value-added service
•Increase capacity per DC opposed to adding more DC’s.
•Traditional labeling is the limiting factor in achieving higher throughputs
•Must cut costs to remain competitive
•Reduce labor, time and shipping costs
•DC’s need to be increasingly flexible to serve E-Commerce and traditional retail
•Labeling technology
•Same day delivery ultimate goal!

7. 6
Market Need
• Report: Online clothes orders are often returned in the UK
• More than one-quarter of UK retailers say returns have increased in the past 24 months,
according to data from Barclaycard. The effect is especially seen in online clothes orders,
where 47% of the value of such orders is returned.
• Address and delivery issues – 20% errors?

8. 7
Create New Delivery Products
Product design should focus on speed and new features
• Same day solutions are becoming commercialized
• Secure delivery + speed are most interesting to urban
consumers
• Dynamic Re-Routing is being well received by
customers
• Late evening and weekend deliveries are becoming
regular
Fulfillment services
Creating products by targeting specific segments supports the creation of a
differentiated delivery experience

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Trend Today: Ship From Store
1. A few reasons: one of the primary reasons is for inventory optimization.
2. Balancing how much to ship from store?
3. Speed vs. Reduced Shipping Cost

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eCommerce is the fastest growing segment of the
retail sector, and as such B2C shipping has accounted
for over half of shipping volume since 2014.

11. 10
Returns Are The Rule

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Reverse Logistics Market Need
• Reverse Logistics Efficiency
• Receiving of returns – labor-intensive / non value-added service
• Increase capacity and throughput per DC opposed to adding more DC’s.
• Traditional labeling is a limiting factor – SQRL label standard option
• Must increase yield and asset recovery to remain competitive
• DC’s need to be increasingly flexible to serve E-Commerce and retail
• Same day processing and disposition is ultimate goal

13. 12
Consumer Behavior is Shifting
• Ecommerce growing 15% annually
• Ecommerce sales reach $500B by 2018
• Returns are 2-3 times brick & mortar rates
• Buyers expect no hassle, cross-channel, free freight, unlimited return
policies

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Consumer Products Are Changing
• IoT (Internet of Things) everywhere
• Data is king – and IoT tracks consumer behavior
• Interoperability and connectivity are critical
• IoT has over 300 variations (IEEE standards)
• Products may not talk to each other
• Returns are 5x higher with IoT products

15. 14
The Amount of Online Returns Will Overtake
Brick & Mortar Returns Soon

16. 15
Drivers of Returns
Data: mail-order catalog retailer selling women’s
fashion clothing
Color variety
One more color => 0.7% decrease in return rate
Size variety
One more size => 0.5% increase in return rate

17. 16
Drivers of Returns
Data: Large Apparel
and Accessory Retailer
Example action:
• Want consumers try
different product
categories but worry
about returns
• Target coupon that can
be used only for new
categories

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Takeaway
Knowing the drivers of returns
enables:
effective resource allocation
strategies for
reducing returns
and
marketing strategies to balance
sales and returns

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3 Common Approaches
1. color swatches
2. zoom
3. alternative photos (models,
No evidence of a
relationship
between viewing
different colors and
return rates
Strongest
empirical result:
alternative
photos lead to
HIGHER return
rates
“impression-based”
information
unrealistic expectations?
Some (weak) evidence:
using zoom leads to
LOWER return rates
(factual information)

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POTENTIAL SOLUTION: VIRTUAL FITTING ROOMS
Customer creates a “virtual model” by providing body measurements,
skin tone, and hairstyle.
Does it work? Based on a randomized field experiment:
conversion rate
order size
$
$$$
return rate
10-16%
increase!
1-2%
increase!
>5%
decrease!
Net Result: 13.5%
profit increase
from the virtual
fitting tech

21. 20
New Label Standard for QR Codes
Zoom technology and
other sources of
factual info seem
to reduce returns.
But beware of
impression-based info!
There is evidence that
virtual fitting rooms
are very effective
at reducing returns
(along with other benefits)

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New Label Standard for QR Codes
SQRL
Standard QR
Labels
ANSI Standard
MH10.9.2.12N

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USE CASES…
• Consolidate Labels
• Single Swipe Scanning
• Pre-sales
– Customer Support FAQ
– Warehouse
– Fraud Detection
• Post Sales
– Returns– Logistics &
Disposition
– Repair triage & record
keeping

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Over 30 Different Categories and Labels
Plus more! Each courier service has different labels!!!

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How Many Barcodes?
ONE LABEL DOES IT ALL!

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Customer Returns - RIPPLE EFFECT:
• 95% sold on the secondary market
• 400M additional units returned in 2017 from ecommerce alone
• What impact is this having on warehouse space?
• Parts supplies?
• 3rd parties?
• Technology developments?
• Tracking & data analysis?
• Policies?
• Repair & refurb industry? Etc.

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RESOURCES
Tony Sciarrotta, Executive Director
The Reverse Logistics Association
tony@rla.org
www.rla.org
2018 Seminars
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28. First Link In Your Supply Chain
Sourcing | Wholesale | B2B eCommerce
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