Enhancing Profitability and the Customer Experience Through Your ...

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Enhancing Profitability and the Customer Experience Through Your Returns Strategy

OFFICIAL MAGAZINE OF THE

Edition 90

CONTENTS Issue 12 Volume 3

ARTICLE

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Enhancing Profitability and the Customer Experience Through Your Returns Strategy By Jeff Elliott, Managing Director of Technology Sales at FedEx Supply Chain With the rapid growth of e-commerce, companies of all sizes are striving to maintain competitiveness by investing in the fulfillment side of their supply chain. While the focus on fulfillment can make business sense due to the sheer volume of operations and increasingly demanding customer expectations, reverse logistics should not be overlooked.

Two sides to every story. … Return Logistics and Return Frauds By Dr. Sunnanda Panda, Founder and CEO of RevLog Resources, India This article talks about liberal returns and return frauds as two sides of a story making it important to strike a balance for its optimum use by consumers and retailers. It gives an insight into the Indian scenario on the issue.

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Wake Up: Returns are YOUR fault, NOT the customers By Bill Stuart, Founder, Stuart & Associates Inc. My friend had a cat he was thinking of getting rid of because it pees all over the house and his place smells terrible! I thought “what a disgusting cat.” Then it struck me, “Hey wait a minute, it’s not the cats fault it was happening, it was my friends.” He never took the initiative to learn how to change the cat’s behavior.

5 Trends Impacting the Return Experience for Telecom Customers By Gustavo Merchan, CMO, Beesion Just about every telecom subscriber has trekked to a retail store, waited in line, manually removed their SIM card, and returned a device - either because of buyer’s remorse, trade-in, repair, or some other reason.

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Sizing Up Return’s Impact on Logistics By Ronen Luzon , CEO, MySize The reverse logistics industry has a focus of cleaning up the returns process. But as ecommerce is projected to grow exponentially, the supply chain is not as smooth as it used to be.

One Label to Do it ALL! By Tony Sciarrotta, Executive Director, RLA Recently, I made some purchases at various retail stores and noticed their product labels. My new Weber Grill had several labels on it. We were able to decipher them. The label had three pieces of information compiled into one QR code. That was nice, but there is no separation between the fields… where does the serial number end and the UPC code begin?

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Reverse Logistics Magazine | Edition 90

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Message from the Editor

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Industry Focus Committees

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Publisher – Tony Sciarrotta Editor – Felecia Przybyla Magazine Production & Graphic Artist – Benjamin Trokey Board of Advisors Jack Allen, Cisco Tim Brown – Georgia Tech Lisa Cotter – Best Buy Jeff Elliott, FedEx Supply Chain Ryan Holden, The Home Depot Chuck Johnston – goTRG Troy Kubat – Walmart Thomas Maher – Dell Kenny McDaniel – Intel Monica Orlando – HP Steven Nickel – Google Jim Rallo, Liquidity Services Tony Sciarrotta - RLA, Executive Director For more information on the Board of Advisors, go to RLA.org Editorial and Circulation Office 2300 Lakeview Parkway, Suite 700 Alpharetta, Georgia 30009 USA Phone: 801-331-8949 Fax: 866-216-8672 [email protected] www.RLmagazine.com BPA Worldwide Membership May 2010. Printed in the U.S.A. ISSUE 12 VOLUME 3 REVERSE LOGISTICS MAGAZINE (ISSN 19343698) is published monthly for $18/per year by Reverse Logistics Association. iTunes In-App Purchase: $4.99 Amazon Kindle Monthly Subscription $1.49

Message from the Publisher

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RLA Management Team

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RLA Advisory Board

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What’s Up RLA?

Industry Events

36

Right to Repair

38

View from Academia

43

Our Members

47

Ad Index

47

Job Postings

Edition 90 published April 2018. The information presented in this publication has been provided by corporations and is believed to be accurate; the publisher cannot assure its completeness or accuracy.

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Edition 90 | Reverse Logistics Magazine

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Message from the

Editor Update to our Polystyrene story: Since the last edition, I’ve had some local success. I went back to my beginning steps and did a new search for a local polystyrene recycler - and surprisingly a new name showed up. I called to confirm, and was told that they do take polystyrene, and that they just started this new program within the last month. I was thrilled!

I drove 15 minutes away to drop off the coolers (I had now accumulated 2 coolers from my friend), and found this great facility. It was a drive up location, and I was immediately greeted at my car by a worker. She quickly asked me to NOT get out of my car, and that they would get it out for me. She did ask me for my ID to verify I am a local resident. Another worker came out to help, went to the back of my car, and found the 2 coolers. I was then told they can’t take these coolers because there was no #6 marked on the cooler. I explained that I had called and was told that they take polystyrene, but was again told that if there is no #6, they can’t take it. I was then told that I need to just put it in the trash (!!!!!). I told the worker that they should NOT be telling residents to put this material in the trash. He went and spoke to his manager, and continued to say they can’t take the coolers. I asked to speak to the manager. The manager came out, saw the coolers and changed his mind, explaining to the other employees that this material will break down, so it’s recyclable. The former employee opposed again, and disagreed, that if it doesn’t have the #6, then they can’t take it, and walked away. Again, the manager explained that if it’s this particular polystyrene (breakable) material, then they can take it. I asked the manager what will happen to these coolers now. He said, “We will take care of them.” I asked for specifics, since I don’t want them dumping these into the trash and ending up in a landfill. He reassured me they wouldn’t and that when I drive around front, we will see a big blue dumpster full of the same material, and that their recycling company provides some big bags for them to put the pieces into, and they will come to take them away and get recycled. The company is Dart Containers, who I plan to get in touch with soon. Obviously – some education needs to take place for these local facility workers. So my issue was solved, however, looking at the polystyrene recycling map, there are many residents throughout the U.S. who don’t have nearby recycling access like I do. So, stay tuned - I have an update from the food provider, and the logistics provider, and hope to get in touch with the cooler manufacturer, looking for more information on the FDA regulations and the procedure and cost to sterilizing a used polystyrene cooler. This won’t be an easy or quick process, which is unfortunate for the consumers, but hopefully we’ll find a solutions provider who might be able to find an answer. Felecia Przybyla RL Magazine Editor [email protected]

OUR MISSION The Reverse Logistics Association is a members’ driven, global trade association for the returns and reverse industry, offering information, research, solutions and services for Manufacturers, Branded, and Retail companies from Third Party Providers. Our goals are to educate and inform Reverse Logistics professionals around the world, and be the voice of the reverse industry.

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Reverse Logistics Association

Industry Focus Committees

Industry Committees are set up to provide a standing forum for Reverse Logistics Professionals to meet on a regional and global basis and discuss common Reverse Logistics issues at the RLA Conferences and Expos. Industry Committees educate the industry on reverse logistics: • “Best Practices” • Consumer Satisfaction Issues • Regulations on a Worldwide & Regional Basis Processes that can Reduce Costs This is a Benefit offered to all RLA Members

CONSUMER PRODUCTS

Chairperson: Paul Baum, PlanITROI Co-Chairperson: Joyce Cruts, ACER Co-Chairperson: Derek Bussler, Best Buy RLA Advisor: Maria Molina

RL STANDARDS AND CERTIFICATION

Chairperson: Ron Lembke, University of Nevada Co-Chairperson: Paul Rupnow, Andlor Logistics Systems Inc. Co-Chairperson: Ken Jacobsen, Connexus RLA Advisor: Mike Alford

SERVICE, PARTS, AND WARRANTY MANAGEMENT

Chairperson: Jim Scarff, Encompass Co-Chairperson: Greg Updike, The Home Depot Co-Chairperson: Vamsee Devireddy, Samsung RLA Advisor: Donna McBride

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RECYCLING AND SUSTAINABILITY

RLA Advisor: Mark Erickson Seeking Leadership and Membership for this new committee. If interested, join the committee at www.rla.org

WIRELESS AND MOBILITY DEVICES

RLA Advisor: Donna McBride Seeking Leadership and Membership for this new committee. If interested, join the committee at www.rla.org

LATIN AMERICA COMMITTEE

RLA Advisor: Maria Molina Seeking Leadership and Membership for this new committee. If interested, join the committee at www.rla.org Join today at www.RLA.org


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Message from the

Publisher Your RLA continues to grow as a premier member-driven industry group. Our membership level has grown as it did in the earlier years, and I appreciate the support. We plan to continue growing our membership with more retailers and manufacturers that I am addressing at many industry events, as RLA is recognized as the voice of the reverse logistics industry. We are reaching out to companies in new categories such as postal, supply chain, service, recycling, material handling, and home delivery. We are also planning a membership drive supported by the RLA Advisory Board.

The survey results for the 2018 RLA Conference are in, and the majority of attendees said they were extremely or somewhat likely to recommend our event to your colleagues. Thank you for that great response. We are looking at the reasons for attending, the most important topics at the conference and your requests for next year, and I can announce we will be in a new hotel in Las Vegas again the week of February 5th (right after the Super Bowl). Since the RLA is a member driven association, we consider survey results important and we will listen to them. RLA will also survey members about what you need from this association. The Advisory Board has recommitted their support to the RLA, and to the 1-day Seminars that are being planned, as well as a return to Amsterdam for RLA Europe. Stay tuned as we plan more for the RLA and our members, and we will keep growing. Best regards,

Tony Sciarrotta [email protected]

RLA MANAGEMENT TEAM DIRECTOR, BUSINESS DEVELOPMENT Michael Alford DIRECTOR, ADVERTISING & BUSINESS DEVELOPMENT Lisa Dalgaard DIRECTOR,TECHNICAL SERVICES Luis DeGuzman DIRECTOR EVENTS & OPERATIONS Beth Donow DIRECTOR, BUSINESS DEVELOPMENT Mark Erickso DIRECTOR BUSINESS DEVELOPMENT Donna McBride

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DIRECTOR, COMMITTEE ADVISOR & BUSINESS DEVELOPMENT Maria Molina ACCOUNTING Angela Powers MEDIA MANAGER Felecia Przybyla DIRECTOR OF CONFERENCES Ahmad Sahar EXECUTIVE DIRECTOR Tony Sciarrotta

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April 18-19 at Americasmart Center, Atlanta, GA

JOIN 1,500+ RETAILERS AND GROCERS TO DISCUSS INNOVATIONS ACROSS PARCEL, FREIGHT, TECH & IT, AND GROCERY ECOMMERCE. Featured Keynotes: PAUL MISENER

AMIT BATRA

VP Global Innovation Policy & Communications

Director of Last Mile Delivery Operations

Featured Panel: Returns are viewed as a burden and a waste – how can we view them as an opportunity instead? MODERATOR TONY SCIARROTTA, Executive Director, Reverse Logistics Association

PANELISTS JOYCE CRUTS, Director of Supply Chain Operations, Acer Corporation DENNIS COHEN, Senior Director of Supply Chain, Aaron's Inc CHUCK JOHNSTON, COO, goTRG.com RYAN HOLDEN, Director of Returns and Repair, The Home Depot

REGISTER NOW! WWW.TERRAPINN.COM/HOMEDELIVERY

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Board of

Advisors Jack Allen – Cisco is the worldwide leader in IT and networking, with $50B in revenues annually. Cisco helps companies of all sizes transform how people connect, communicate, and collaborate. As Sr. Director, Global Logistics, Supply Chain Operations, Jack manages logistics activities that support all of Cisco’s product revenue and returns. This includes forward and reverse logistics, export operations, transportation, warehousing, packaging engineering, customer logistics and logistics innovation practices. Jack’s team manages an end-to-end ecosystem of global partners consisting of the best and most innovative logistics corporations in the world.

Jeff Elliott – FedEx. As Managing Director of Sales in Technology Solutions at FedEx Supply Chain, Jeff Elliott spearheads the company’s strategic approach to expanding the customer portfolio within the technology vertical, while fostering the existing customer base. In this position, Elliott serves a vital role in driving lead generation, prospect engagement and relationship management for the Technology Solutions business unit. FedEx Supply Chain helps technology customers streamline operations, optimize their logistics networks and drive continuous improvement with its innovative, industry-leading solutions.

Tim Brown – Georgia Tech Supply Chain & Logistics Institute, Tim Brown is Managing Director of the Supply Chain & Logistics Institute, an Academic Program Director in Georgia Tech Professional Education, and an instructor in the Stewart School of Industrial and Systems Engineering at Georgia Tech. Mr. Brown has worked in the reverse logistics area for over twenty years; consulting with companies such as Philips Electronics, Apple, and IBM in the development of their reverse logistics and service operations strategies, infrastructure, and procedures. Mr. Brown was selected as a “Professional to Know” by Supply and Demand Chain Executive.

Ryan Holden – The Home Depot, Ryan started with The Home Depot in 2003 as a store sales associate. He has held roles of increasing responsibility including bulk distribution center Operations Manager, Manager of Return to Vendor Contracts, and currently Director of Returns and Repair Business. In Ryan’s current role, he is responsible for secondary market goods, company repair programs, and return to vendor business functions.

Lisa Cotter – Best Buy, Lisa Cotter has over 20 years experience leading all areas of Supply Chain including Distribution Management, Inventory Management, Process and System Design, and Supply Chain Network Design. Lisa is in a newly created role of Sr. Director of Reverse Logistics for Best Buy. She is responsible for the end to end total company process and system road map as well as managing the 3rd party reverse program for mobile phones.

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Chuck Johnston – goTRG, Chuck is COO at goTRG, a global leader in the implementation and execution of omnichannel and supply chain solutions. He was formerly the Director of Reverse Logistics for The Home Depot, responsible for all return and repair operations. Prior to that he oversaw the Reverse Logistics operations for Wal-Mart Stores Inc. Chuck has been involved in the Reverse Logistics industry for over 20 years and is considered the foremost expert in the field. He is a sought after speaker and considered one of the most innovative thinkers in the industry. In addition to his experience in the reverse space, he has led numerous Specialty Distribution Operations in his 23 years with Wal-Mart. While at Wal-Mart, Chuck was responsible for the development of a profitable, “best in class” Reverse Logistics organization that is still the benchmark for all other retailers.

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Board of

Advisors Troy Kubat – Walmart, As Sr. Director, Specialty & Reverse Logistics at Walmart Troy is responsible for the company’s U.S. Reverse Logistics operations in a network which currently includes; 6 Return Centers, 6 Returns Consolidation Centers, 7 Used Asset Centers, and 7 Electronics Refurbishment Centers. Also responsible for Specialty Logistics operations that includes the Information Technology Distribution Center and Mailing and Print Solutions Distribution Center. Divisional operational leadership for Walmart, Sam’s, and eCommerce returns business, encompassing 3,600 associates. Oversight for Secondary Market Sales team and Used Asset Retirement/ Sustainability business. Thomas Maher – Dell, Tom Maher joined Dell in 1997 and is the Senior Vice President for Global Service Parts. Mr. Maher is responsible for service parts life cycle support in over 100 countries. Mr. Maher’s global service parts responsibilities include: planning, procurement, distribution, returns, repair, inventory management, supplier management and parts disposal. These operations support 100% of Dell’s warranty customers across all Business Units and all Product Lines. Kenny McDaniel – Intel, Kenny McDaniel is a senior program manager within Intel Corporation’s Global Reverse Logistics (GRL) group. GRL is tasked with handling returns for all of Intel’s products from all of their customers, ranging from worldwide, multi-billion dollar integrators to small, local dealers. Kenny has worked within GRL for over 17 years in a variety of roles, helping to develop the warranty support and RL processes for Intel’s products, business units, and customers. He is currently the RL business/finance program manager, focused on strategic RL ops and finance elements. Steven Nickel – Google, Steven currently leads Google’s global reverse logistics operations and value added support services development for all of its consumer hardware products. He’s been

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with Google for nearly five years, but brings 20+ years of experience in consumer technology--building amazing teams, growing profitable businesses, and improving customer experiences. Monica Orlando – HP, Inc. Monica Orlando has over 15 years of experience in Supply Chain designing and managing a variety of complex processes spanning across Planning, Manufacturing, Logistic, Order Fulfilment and Inventory Management. As Director of Channel Operations Monica is responsible for all the supply chain aspects of distributing PCs and Printers to the North America HP Retailers/Distributors, including the reverse logistic processes and programs. Jim Rallo – The Retail Supply Chain Group The Retail Supply Chain Group helps hundreds of the world’s top retailers and consumer OEMs maximize return for overstock and returned inventory while enhancing and protecting their brands through multi-channel remarketing, return to vendor outsourcing, and product refurbishment. Under his leadership, the team provides clients with better service, scale, and results than any other provider, ensuring the full value of their surplus is captured. Jim previously served as Chief Financial Officer and Treasurer of Liquidity Services from 2005 to 2015. Tony Sciarrotta – Reverse Logistics Association, Executive Director, In 2016, Tony took over and became the Executive Director of the RLA after 12 years of active involvement on the Advisory Board and Committees. In over 35 years in the consumer products industry, Tony held various positions including 15 years in returns management at Philips where he developed new reverse logistics strategies. He worked with retail partners and industry groups to implement returns initiatives still in use. Tony has been an evangelist for improving the customer experience to reduce returns and their associated costs. Today, Tony is considered a subject matter expert in reverse logistics, and speaks for the industry at conferences all over the world.


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Enhancing Profitability and the Customer Experience Through Your Returns Strategy By: Jeff Elliott, Managing Director of Technology Sales at FedEx Supply Chain

With the rapid growth of e-commerce, companies of all sizes are striving to maintain competitiveness by investing in the fulfillment side of their supply chain. While the focus on fulfillment can make business sense due to the sheer volume of operations and increasingly demanding customer expectations, reverse logistics should not be overlooked. Returns are an increasingly critical and integral part of creating a great customer experience. However, the costs to manage them are becoming more significant as well.

annually, and the average return rate for e-commerce orders is 30 percent compared to 9 percent from purchases made at brick and mortar locations1. With the continued growth of online sales, the cost of product returns will continue to increase for brands. I believe that an increase in returns presents an opportunity for companies and 3PLs to drive a competitive advantage through a strategic program that involves the brand experience, physical storefronts and purposeful disposition methods.

From my perspective, the per-unit costs of returns — accumulated from customer interaction through final disposition — are much higher than products moving through the fulfillment side of the supply chain. These costs, in conjunction with the increasing complexity of managing returns, require the same amount of optimization as the forward supply chain to design a customer-centric and cost-effective operation.

FORWARD SUPPLY CHAIN OPTIMIZATION: A MODEL FOR BETTER RETURNS MANAGEMENT

For decades, manufacturers, retailers and their logistics partners have been applying significant resources and expertise on optimizing the forward supply chain. Whether an entrepreneur is starting a new business or an established brand is launching a new product, the team must first evaluate the market and price the

Reverse logistics can become an opportunity to foster customer loyalty and drive profitability when done well. This article reviews the central role of returns in the current state of retail and highlights different approaches and concepts that can help manage the increasingly complex returns environment to reduce waste, prevent the amount of returned product and optimize processes.

MANAGING THE GROWING RETURNS CHALLENGE: A THREAT OR AN OPPORTUNITY?

Consumers return more than $640 billion of products

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that companies must apply the same profitability filters utilized on the forward supply chain for the reverse supply chain to identify opportunities to eliminate inefficiencies.

product to cover costs and generate a profit. If the market won’t support a price at which the business can manufacture and deliver the product profitably, the company must either modify the product or stop production. All companies must consider their sales channels and customer expectations for product delivery when it comes to the supply chain. Historically, this implied selling through traditional brick-and-mortar retailers, but logistics networks have grown in complexity in a response to online spending. Given these delivery requirements, teams must design and implement an optimized supply chain strategy, considering all of the steps from manufacturing to delivery. These steps include: 1. Deciding on the optimal location for manufacturing. 2. Utilizing a sophisticated network and powerful analysis tools to locate distribution centers. 3. Following sales and operations planning processes to support inventory plans. 4. Implementing warehouse automation and optimization technology and Transportation Management Systems to efficiently store, fulfill and transport products.

OPPORTUNITIES FOR IMPROVEMENT TRADITIONAL RETURNS MANAGEMENT

IN

Although companies carefully strategize on their forward fulfillment and distribution, it’s often a default to place returns in the back of the distribution center. This approach creates a separate but nearby returns center – rarely do brands analyze and optimize for location. Companies often create a one-size-fits-all solution for returns which involves bringing all returns back to the centralized processing point, including product that’s processed and then discarded. I strongly believe

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If brands extend the one-size-fits-all perspective for prioritizing and managing returns processing, their traditional returns model will process returns for very different products with the same priority. If they peel back this opportunity, they may realize that products can be at a point in their lifecycle where the value is rapidly decreasing or conversely, relatively stable. As a result, they can come to a conclusion that demand for different products is highly variable and failing to account for this variability leads them to a missed opportunity to optimize redeployment of the product. In addition to improving the bottom line, returns offer a chance to improve the consumer brand experience. A well-designed reverse strategy has the ability to further simplify the process, speed up crediting time and improve overall returns avoidance for shoppers.

CREATING A COMPETITIVE ADVANTAGE THROUGH RETURNS MANAGEMENT

Returns management is a strategic consideration which requires technology investment, operations planning and labor allocation. By meeting consumer expectations of “free shipping and returns,” businesses will notice that this model drives up costs of returns and triggers a more in-depth analysis of the policy itself. However, businesses are beginning to shift away from this approach as return rates associated with online spending continue to rise. The answer to improving the customer experience isn’t just about making the return shipping free, however. One way that online retailers can improve their customers’ returns experience is to provide a brick-and-mortar returns option. Surveys show that 62 percent of shoppers are more likely to shop online if they can return an item in store2. Many e-commerce retailers also have storefronts and this allows them to easily offer this option. Today, more than half of return polices allow for customers to return online orders to a store for a refund or replacement which has emerged as a core consumer preference. Today, customers frequently make buying decisions based on their level of confidence and comfort with how their returns will be handled. Nearly 70 percent of online shoppers check the returns policy before completing their purchase. Buy Online Return In Store (BORIS) is becoming a huge value proposition and also has the ability to generate additional spontaneous sales

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1. Providing immediate credit by having a customer return product to a person who can validate the type, quality and condition of the return, right on the spot. 2. Lessening customer frustration with packaging their returns for shipment by providing a storefront for this process solves this problem. In turn, you’ll also decrease the number of damaged product and expensive shipping costs. 3. Strengthening the brand experience for the shopper by having a person accept the return and hear the voice of the customer directly. It will also generate a better understanding of the actual cause of returns. 4. Giving consumer alternatives to the return by either troubleshooting a product believed to be defective or providing a product exchange opportunity.

In addition to improving the customer experience, customers can better maximize cost-effectiveness in the following ways:

from customers. However, this assumes that there is a brick-and-mortar option available for the customer.

TAKING RETURNS CLOSER TO THE CUSTOMER CREATES A BETTER CUSTOMER EXPERIENCE, AND ENABLES A MORE OPTIMIZED RETURNS MANAGEMENT PROCESS.

While companies wouldn’t continue producing a product that costs more to make and deliver than what it’s worth, companies often don’t apply the same logic to returned inventory. Instead, brands will routinely pay to ship product back to a returns center, receive and process the return only to later dispose of it because there is insufficient value. This traditional way of handling returns is beginning to significantly impact the bottom line as costs to manage returns currently offset 4.4 percent of retailers’ total revenue.3 One element of an optimized returns strategy is to take the returns closer to the customer, and optimize the management of the return from that point. Businesses should provide optimized return locations, selected by traffic volume, to improve the overall customer experience, reduce costs and improve profitability.

1. Minimize fraud: Data shows that customers are less likely to fraudulently return product in-person compared to shipping to a returns center, improving a retailer’s overall revenue stream. 2. Improve returns avoidance: A storefront return location also provides an opportunity for returns avoidance. For technology product returns this may incorporate instore diagnostics or even light repair – potentially eliminating the lost revenue and cost of further processing of that return. 3. Accelerate redeployment times: Probably the greatest opportunity for cost reduction is in optimizing the disposition decision and the pace of returns handling. By utilizing centrally managed systems, we can leverage information regarding the recovery value for the product and the cost of processing, the current supply and demand for that product as well as the rate of value decline. Much like optimizing forward supply chains provides an opportunity to achieve a competitive advantage, reverse supply chains represent an opportunity to significantly improve the customer experience and the associated total supply chain costs.

With an optimized returns strategy in place, This strategy should focus on the “first mile” of the retailers can improve the customer experience returns process, and should provide an opportunity for a brick-and-mortar returns location – a key element of by: a more customer-friendly returns program. Receiving

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the return closer to the customer also enables better business decisions to be made on how the return is handled before any unnecessary costs are incurred. Customers can easily make more informed decisions about their strategy with real-time information about value and demand. These decisions will later lead to better direction to the collection points for optimized routing and processing. By focusing on the first mile of the returns process and designing a more holistic product network, which includes reverse strategies, businesses can maximize profitability and improve the overall customer experience. Go to supplychain.fedex.com to learn how FedEx Supply Chain can support your reverse logistics strategy.

REFERENECES

CBRE Research, “Swimming upstream: navigating the world of reverse logistics,” February 2016 2 https://www.business2community.com/infographics/ e-commerce-product-return-statistics-trendsinfographic-01505394 3 CBRE Research, “Swimming upstream: navigating the world of reverse logistics,” February 2016 1

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Jeff Elliot, Managing Director, Technology Sales, FedEx Supply Chain. As Managing Director of Sales in Technology Solutions at FedEx Supply Chain, Jeff Elliott spearheads the company’s strategic approach to expanding the customer portfolio within the technology vertical, while fostering the existing customer base. In this position, Elliott serves a vital role in driving lead generation, prospect engagement and relationship management for the Technology Solutions business unit. FedEx Supply Chain helps technology customers streamline operations, optimize their logistics networks and drive continuous improvement with its innovative, industry-leading solutions. During his more than 30 years in the field of global sales, supply chain management and consumer electronics, Elliott has served in numerous positions of increasing responsibility. He has extensive experience in sales leadership, international expansion and commercial team development. Elliott received his bachelor of science in chemical engineering from North Carolina State University.

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RLA @ Intralogistics Europe 2018

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Two sides to every story. … Return Logistics and Return Frauds By Dr. Sunnanda Panda, Founder and CEO of RevLog Resources, India

This article talks about liberal returns and return frauds as two sides of a story making it important to strike a balance for its optimum use by consumers and retailers. It gives an insight into the Indian scenario on the issue. Sometime ago, the National Health Service (NHS) provided free ambulance pick-up and drop-off in emergency patients in United Kingdom. Many people living in the suburbs would feign a medial emergency and avail of the free ambulance service with the intention of getting a free ride to the city center to shop. Due to this heavy misuse, the NHS has now converted this service to a paid service unless the doctor writes off the fare – in case of an actual emergency. Similarly we are so heavily focused on customer experience by luring them with generous offering like COD payments, doorstep delivery, no questions asked return policies, everything to please the buyer. But soon we have to focus on ‘buyers fraud’, where buyers cannibalized genuine parts replacing them with fake ones and then simply returning the product.

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India’s e-commerce penetration has grown many folds in the last few years. 89 percent regular customers continue to shop online, as they are reassured of the liberal return policies offered by e-tailers. On an average 11-12 percent of all online purchases are returned by customers. Of course this percentage differs across products, with an alarming return percentage of 20-25 percent for online apparel. Nearly 14 percent of the returns received by e-commerce companies are fraudulent, and they are expected to increase as long as companies continue with no questions asked returns. The exchange fraud rate is observed to be about 40 percent for mobile phones and can go as high as 90 percent on large appliances even from posh localities. Another fraud is the unboxed return fraud, where buyers buy a product then place a return request because it doesn’t match their need, cannibalize internal parts before returning the product. An example, a circuit is removed from an air-conditioner. Buyers may not be capable of carrying out this type of ‘technical fraud’ themselves; but many a times multiple middlemen buy these unboxed goods, remove important parts from them and resell them to

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retailers (in the B2B space). Flipkart a leading online store in India has undertaken CRISIL verification of its vendors to prevent this type of fraud. Another variation is the exchange fraud. To push sales of new launches, players encourage buy backs claiming that they are in good condition. For example, the buyer could exchange a washing machine for a new one, wrongly claiming the full functionality of the old washing machine, making it a very good case for buyers exchange fraud. Even at stores, return fraud relating to stolen merchandise and use of falsified receipts are exchanged for cash or store credits. The toll is even higher for retailers who rely on Omni channel retail intending to close the loop on ecommerce and marketing purchases in person. The problem of return fraud is even more complex as the customers are able to interact (in-store, mobile, desktop), so to keep track of his purchase and returned products becomes even more difficult.

Technology has played a significant role in deterring fraudulent returns. Better use of data, a more end-toend perspective and prevention programs are helping to reduce return rates for some operations but there is still room for improvement. The more information retailers can collect from a customer, the better they can head off fraud and nail down the reason for the returns. The advantage of having more information about their customers would discourage them from returning fraudulent merchandise and disappearing with the refunds. Therefore retailer continue to their tried and true ways of combating frauds through increase usage of identification, as well as seeking new and innovative approaches on the back end too. Some companies are developing a Customer Behavior Index (CBI) to predict the frauds to be committed by consumers basis their historical behavior. To combat this issue for etailers, third party logistics providers are offering “quality check at doorstep”. This product allows ecommerce companies to decide process flow to be followed at the customer’s doorstep for each pick-up. Once the rider completes the quality check of the pickup at the doorstep the result snapshot is shared with clients and the end customer, bringing complete transparency in the whole process. This has had astonishing returns in bringing the fraudulent returns drastically down. So it is important to have liberal returns policies for customer satisfaction but also equally important to make the returns barrier high so that this practice is not misused. Dr. Sunnanda Panda, logistics professional with a PhD in reverse Logistics. Founder and CEO of RevLog Resources, India.

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LIVE PODCAST:

“The Retail Hangover: Returns & Reverse Logistics” Tuesday June 19th, 2018

Hosted by

Scott W. Luton, CSCP, LSSGB

Managing Partner, TalentStream EVP, APICS Atlanta

12 noon to 1 pm EDT

FREE to register: click here OR for automatic registration, send email with contact info to:

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Make it easy for people to shop online and they will...and they will return 25-40% of it versus 8-9% in actual stores. In this session, we will discuss:

 Growing omnichannel return & service issues  Impact of the consumer purchase & delivery experience

Featured Speaker:

Tony Sciarrotta Executive Director The Reverse Logistics Association (The RLA) Former Phillips Director, Returns Management & Asset Recovery

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Wake Up: Returns are YOUR fault, NOT the customers By Bill Stuart, Founder, Stuart & Associates Inc.

My friend had a cat he was thinking of getting rid of because it pees all over the house and his place smells terrible! I thought “what a disgusting cat.” Then it struck me, “Hey wait a minute, it’s not the cats fault it was happening, it was my friends.” He never took the initiative to learn how to change the cat’s behavior. Returns in your company is a very similar situation. How can you blame YOUR customers for returns when you have not done everything possible to change the behaviors? I’m not only talking about the behaviors of your customers but also the management and associates at all levels in your own company. LOOK I am not going to go on a long winded explanation of why it’s your fault because then I would be pointing the same finger at you, that you are pointing at the customer and I did at the disgusting cat. While everyone is very focused on the logistics of returns I want you to better understand why it’s happening to YOU. Instead take 3 min. and honestly answer these questions without doing research and without asking other people for answers. What were the company’s sales the last three years (You can estimate) 2017 $________ 2016 $_________ 2015 $_________

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What were your company’s return rates the last 3 years? (You can estimate) 2017 _____% 2016 _____% 2015 _____% What were the dollars of returns for those same three years (You can estimate) 2017 $________ 2016 $_________ 2015 $_________ Did you find it easier to correctly estimate the sales than to estimate the returns? YES__ NO __ Of the people in the positions listed below: Put a check mark next to the ones that you feel would at least 25% of the sales and returns information above, off the top of their head. There are two lists one for Retailers and one for Manufacturers, do only the one that applies to you.

RETAILER

___CEO, ___CFO, ___SVP sales, ___VP online sales, ___ Regional VP, ___Dist.Mgr, ___Store Mgr, ___Asst.SM, ___Dept. Mgr., ___Sales assoc., ___Customer service, ___Cashier, ___Repair center, ___Shipping and receiving

MANUFACTURER

___CEO, ___CFO , ___SVP sales, ___Divisional of sales, ___VP of Online Sales, ___Marketing, ___Product development,

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Industry Events ISRI Convention & Exposition 2018 Las Vegas, NV – April 14-19, 2018

SIA Global Executive Summit 2018 Las Vegas, NV – April 15-17, 2018

RLA @ Home Delivery World Atlanta, GA – April 18-19, 2018

AHAM Association of Home Appliance Manufacturers Phoenix, AZ - April 19-21

Technology & Standards Forum Santa Clara, CA - May 1-3, 2018

National Postal Forum San Antonio, TX - May 6-9

WERC Annual Conference for Logistics Professionals Charlotte, NC - May 6-9

Apparel Textile Sourcing Miami, FL - May 21-23

RLA Consumer Products Seminar Nashville, TN - May 23

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___Product Design, Call center , ___Customer service, ___Technical support, ___Repair centers, ___Packaging, ____Logistics On a scale of 1-10 ( 10 being best and or regularly scheduled) rate the following: ____ Level of communication concerning return rates and dollars between all of the groups ____ You regularly hold a Returns mtg. with all the positions listed above, attending the mtg. together, to address returns opportunities and solutions ____ You hold returns mtgs with the individuals / individual groups listed above as often as you do sales meetings. (A return is nothing more than a sale in reverse; it’s a potentially lost customer) ____ YOU have a written strategy for reducing returns that includes each of the positions listed above ____YOU have set returns goals just as you do for sales ____ YOU have shopped your website/stores to assess what could be done differently to reduce returns ____ YOU’VE shopped your competitor’s website/stores to seek out what they do better than you ____ YOU’VE used your online chat to assess how it can better reduce returns There are more questions I could ask but I think you get my point. Returns are not a cost of doing business, they are a cost of doing business incorrectly. The customer with a return is not a problem customer; they are a customer with a problem! A problem that

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we, in most cases, have not done all that we could to reduce. When you raise the level of awareness of returns and change how people think of returns that’s when you will start saving sales and customers not to mention the creation of a more knowledgeable and involved organization. Oh, by the way, my friend did finally get a litter box and while the smell still exists, it’s not as pungent and it’s contained. (Get the idea?) You can never completely eliminate returns but you can contain them and increase your odds of keeping the customer. In 1995 Bill Stuart founded the first company focused solely on the reduction of Consumer Returns to Retailers and Retailers returns to Manufacturers. Over the past 23 years Stuart & Associates Inc. has become the Industry Leader in Returns Reduction having dramatically increased its clients profits by developing and implementing proprietary strategies that have REDUCED their clients returns by the $100’s of millions. A few of our clients, past and present, that benefited significantly from our strategies include: Best Buy, Tractor Supply Company, Sears Holding, P&G, Hoover, Philips Consumer Electronics. Bill can be contacted at 615-289-0007 but has limited availability left in 2018 for returns analysis and for Keynote Speaking. Visit us at www.bettersales.com

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RLA SmartBrief Reverse Logistics Association has partnered with SmartBrief to launch RLA SmartBrief, a newsletter specifically designed for returns and reverse industry professionals • Created by SmartBrief, a business news publisher, in partnership with RLA. • A 3x/week snapshot of the returns and reverse industry with news from leading sources. • Summaries of what matters to you, written by expert editors to save you time and keep you informed and prepared.

Sign up or Update your Subscriptions here: www.rla.org Click on Login or Register

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5 Trends Impacting the Return Experience for Telecom Customers By Gustavo Merchan, CMO, Beesion

Just about every telecom subscriber has trekked to a retail store, waited in line, manually removed their SIM card, and returned a device - either because of buyer’s remorse, trade-in, repair, or some other reason.

HIGHER VISIBILITY FOR RETURNS

While those return drivers are likely to remain the same, the subscribers’ return experience is liable to change.

Thus, many carriers are giving returns more prominence by setting up queues and store stations just for returns, buyer’s remorse, trade-in and other reverse reasons.

To start with, there are many more channels to assist with the return effort - online, call center, etc. complementing the retail store. There are also several reverse logistics trends that could touch subscribers and affect their overall return experience. While most of these trends are likely to have a neutral or positive effect, anything that goes awry could create a disgruntled customer.

Returns used to be a bit of a supply chain afterthought. But that changed when used devices began generating good money in secondary markets.

This helps speed up reverse-related traffic because reps become more proficient filling out RMAs or even evaluating the price for trade-ins, which can affect the profitability of the store. At the same time, subscribers can benefit from the shorter wait times and more knowledgeable staff.

MORE AUTOMATION TO REDUCE RETURNS (SPECIFICALLY NO FAULT FOUND)

Secondary markets aside, some telcos are attempting to reduce device returns – especially for no fault found – through automated wizards and chatbots (accessible by phone or desktop computer). Both are designed to trouble shoot device setup and common issues, with the chatbot using machine learning to become smarter with every interaction. Although the jury is still out about how much chatbots, in particular, will lower device returns, one company saw a reduction of 2-3% in returned merchandise for a specific segment.

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Subscribers can benefit from the additional customer service help, as long as it offers valuable advice. If it doesn’t, subscribers are likely to feel frustrated that their time was wasted.

MORE PREVENTIVE MAINTENANCE

To preserve the value of their inventory, more carriers are deploying preventive maintenance practices. For example, updating iPhones with the latest OS patch to address a critical fix, before it’s shipped or sold. This is both a win for subscribers and carriers, who avoid the hassle of fixing the phone after it leaves the store.

Fast forward with artificial intelligence. A rep just takes a snapshot of the device and feeds it into a specialized AI software module (a deep learning, visual neural network) that assesses the make/model of the device and its cosmetic condition. Then it grades the device based on market comps from hundreds, if not thousands, of sources. All of this happens instantaneously, ultimately giving the rep an accurate value for the trade-in. For carriers, AI is a big plus. They will no longer overpay for their subscribers’ devices. For subscribers, they’ll get more consistent pricing for their trades, whether they trade-in online, at the retail store, or any other place.

THE RISE OF THE ESIM

KEEP AN EYE ON THE CUSTOMER EXPERIENCE – USE LOW-CODE

Say, for example, a customer has a broken phone and needs it repaired. Instead of manually removing the SIM card and inserting it into a loaner device, the telco will virtually de-pair the eSIM from the broken device and then pair it to the loaner phone. Once the phone is repaired, the carrier will then do the exact opposite process: virtually de-pair the eSIM from the loaner and attach it to the subscriber’s now repaired device.

But this interaction with the subscriber should not be overlooked or dismissed because it could have a significant impact. Low code developers use For example, if things go visual models, instead of custom poorly, disgruntled or code. That makes it quick to disappointed subscribers expand and change could post their experiences on social media and possibly churn.

Embedded or electronic SIM Cards are expected to increase nine-fold by 2021. These eSIMS may create a smoother customer experience for carriers and customers alike. But, with any new technology, a few kinks should be expected.

Consequently, any reverse logistics company processing returned devices will have to add an extra step to verify that the eSIM is actually decoupled from the device. If it’s not, it will then need to notify the operator and wait for a confirmation. Alternatively, the operator can grant access to the reverse logistics company to decouple the eSIM. The opportunity for any one of these steps to go awry is very real, delaying the returns process. This could, in turn, poke subscribers in the eye.

ARTIFICIAL INTELLIGENCE TO ACCURATELY PREDICT TRADE-IN VALUE

With lots of revenue on the line, it’s imperative that stores don’t overpay subscribers for their used devices. But that’s quite a challenge because reps use some guesswork to determine a price, i.e. eyeball the device’s condition and then use a software program to establish value, using a fixed grading scale.

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Of course, all of these trends are forcing carriers to change their reverse logistics processes well beyond the subscriber touchpoint.

Thus, carriers need to triangulate how reverse trends will not only impact their processes but their subscribers. One solution is to use low-code software to incorporate these trends. Low-code is quick to launch and even quicker to change because it uses little to no custom code. That’s important. Because when you need to fix the customer experience – or respond to any market change – speed is critical. Gustavo Merchan, CMO, Beesion, Gustavo L. Merchan, a graduate of Instituto Tecnológico de Buenos Aires in industrial engineering, has built software and BPM solutions for many industries in the US, Mexico and Argentina. Since 2010, he has concentrated primarily on the telecom industry and helped pioneer a low-code software platform, using pre-built software modules and visual modeling. He has served as CMO of Beesion since 2016.

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Sizing Up Return’s Impact on Logistics By Ronen Luzon , CEO, MySize

The reverse logistics industry has a focus of cleaning up the returns process. But as ecommerce is projected to grow exponentially, the supply chain is not as smooth as it used to be. From fit issues with retail apparel, to parcel delivery companies struggling to keep up with the demand, everyone is looking for solutions throughout the process to improve efficiency and increase their bottom line, and many are turning to data.

RETAIL’S RETURNS ISSUE

We all know the issue – you’ve been shopping online for some new clothes for your big night out. You find some great options, order multiple sizes to ensure you have something that fits, and even pay for expedited shipping to ensure everything arrives in time.

It’s the online equivalent to being in a dressing room in a brick-and-mortar store, but it’s also online retail’s most prevalent problem. The lack of a true sizing system results in buyer confusion, and often, the ordering of an ill-fitting item. Then it’s the retailer left to pick up the tab for the cost of return shipping, as well as resending a new item if it’s required. It’s been reported that 20-30% of online apparel orders are being returned (with 70% of those returns due to problems with fit), costing the retailer anywhere from $3 to $12 per order. One study cites total expenses to e-retailers from apparel returns at $1.4 billion dollars, roughly 2.5% of the total online revenue ($60B) of apparel and accessories in 2015. Returns have become such an expensive issue we’ve begun to see legacy retailers change decades old return policies in order to cut costs. For the last 100 years, L.L Bean had accepted returns of basically any item, purchased at any time, with or without a receipt. But over the last five years, the Company reported losing $250 million worth of returned items that could not be resold. But many retailers still offer free returns for merchandise purchased online, putting a significant dent into the bottom line of a booming industry.

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SIZING UP A FIX

The growth of online shopping has resulted in not just an increase in returns, but an increase in the parcel delivery business, which is poised to grow to $343B globally by 2020. Many logistics professionals realize that a package’s dimensions and weight can make all of the difference in the cost of shipping – and subsequently, their revenues. The dimensions of a package are critical, since you aren’t just measuring a box – you are essentially buying the amount of space you will need on the truck, airplane or ship that will be transporting your package. My Size, Inc. offers efficient solutions to the escalating costs associated with sizing and measurement issues by providing users with the ability to accurately measure everything from everyday objects to body measurements with the quick movement of a smartphone. Their application, BoxSizeID, provides users with the ability to instantly measure packages by utilizing the phone’s internal sensors combined with a proprietary and patent-pending algorithm to provide

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accurate measurements and calculate shipping fees. This technology can be utilized to get a true sizing right from a mobile device, in a matter of minutes. By embedding the technology in their own app (or a white label app), BoxSizeID offers shipping companies, and even retailers, a variety of precise logistical data to more efficiently manage their shipping and returns processes. This provides a customized solution that becomes critical to eliminating the inefficiencies in the shipping industry, while also improving the bottom line. The sizing and return issue has created a sizeable market opportunity for technology companies that can provide a solution enabling those in reverse logistics an opportunity to recoup these losses and continue to drive innovation. Ronen Luzon is the CEO of MySize, a developer of proprietary smartphone measurement applications.

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TURNING GREEN INTO GOLD

Paying attention to the environment is not just good for nature, it’s also good for the bottom line. Our Association doesn’t just save trees. Our Association educates others on how to eliminate the need to destroy them

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One Label to Do it ALL! By Tony Sciarrotta, Executive Director, RLA

Recently, I made some purchases at various retail stores and noticed their product labels. My new Weber Grill had several labels on it. We were able to decipher them. The label had three pieces of information compiled into one QR code. That was nice, but there is no separation between the fields… where does the serial number end and the UPC code begin? If you didn’t know what you were looking at, it was meaningless.

If I had to return this product under warranty, it may be difficult for me to identify the model number. My phone scans the QR code just fine; but, the content is not useful. We know that QR codes can communicate up to 4000 characters. However, there is so much more they could have done to utilize the same space. They could give me a link to order accessories and another for recipes. They could connect me directly to customer support—after

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all, it is a phone I am using to scan the information. Why aren’t manufacturers using QR codes more effectively? Here’s another label from a product I purchase regularly: this time for contact lenses from Johnson & Johnson. Their label was very similar: Just a string of numbers. The QR code can be so much better utilized. Why can’t I scan it and get something like this screen on my phone? And there is still a lot of white space for additional information! Maybe I could even just scan the label to re-order?

The reason they don’t is because there have not been any standards defining how to how to separate the data fields. Each manufacturer develops their own system. Formatting the resulting information is chaos without a standard! In order to make sense out of the information contained in a QR code, the data must be broken into separated

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fields that are identified. But if you have to spell out each field name before the content, you eat up a lot of the space. Spelling out “Model Number” takes up eleven extra characters. The Reverse Logistics Association recently developed standardized QR Labels, referred to as Smart QR Labels or SQRL codes. It is merely a protocol and a data dictionary of field names that allow manufacturers to create complex labels with multiple fields each with their own content. We have also defined a common separator called a “delimitor.” While this is not rocket science, in itself, having standardized field names allows for the standardized formatting of the content as shown in the phone image above. While these fields may take the user to different web locations, they can also contain actual data that does not require access to the Internet. QR codes, after all, can store up to 4000 characters. That is a lot of content space. This opens many possibilities for manufacturers to consolidate labeling. Consolidation of labels will facilitate single swipe scanning. This would increase warehousing efficiency. Consolidation of labels also eases the product labeling process: multiple stickersrequired multiple passes through the scanning process. It adds efficiency to logistics; package handlers no longer have to hunt n’ peck for the correct label. Since it is based on an ANSI standard (MH10.8.2.12N) and is ISO 15434 compliant, channel partners and third party service providers do not need to be trained in your proprietary labeling protocols.

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We mentioned that this is an ANSI standard. The RLA is in the process of promoting the system to an ISO standard. It is still in its infancy and the RLA Standards Committee is soliciting manufacturers for pilot projects. We are continuing to build the data dictionary. It can be found on our website www.rla.org/sqrl. It is easy to request additional data fields. Think of them as XML tags. The dictionary is limitless. How big is a dictionary? Send us your request for adding additional field names. Please contact us if you would like to get involved. sqrl@ rltinc.com As the current Executive Director of the RLA, Tony is very involved in the RLA Committees, especially the RLA Standards Committee. In his 35 plus years in the consumer products industry, Tony has held various positions including 15 years in returns management at Philips. During his Philips years, Tony developed new reverse logistics strategies and implemented many new returns initiatives. He worked with retail partners and industry groups on best practices still being used. Tony then became an evangelist for improving the customer experience to reduce returns and their associated costs. Today, Tony is considered a subject matter expert in reverse logistics, and speaks for the industry at conferences all over the world.


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By Kyle Wiens, CEO, iFixit Fewer than 90 days into the new year, and already 18 US states have introduced Right to Repair legislation. California is the latest, with Assemblywoman Eggman from Stockton introducing legislation that would require electronics companies to make repair manuals, diagnostic software, and repair parts available to owners and refurbishers. Unexpectedly, farmers in small rural towns have been leading the charge for Right to Repair alongside corner computer repair shops around the nation. How did farmers wade into a battle over Big Tech? Because, these days, farm equipment is big tech—literally. They are computer systems that trundle around on massive wheels. As tractors have gotten more complicated, ag equipment makers have tightened the reins on who can access the software—even for the purpose of repair. A traditionally independent bunch, some farmers are fighting back by learning how to hack their tractors to fix them. Meanwhile, farm bureaus and growers associations have thrown their support behind Right to Repair, even as John Deere opposes it. But public sentiment is on the side of farmers, and Big Ag’s closed-fisted opposition to Right to Fair has shown sign of loosening its grip. Recently, the Association of Equipment Manufacturers and the Equipment Dealers Association (both with ties to John Deere) reversed their position and indicated that they would support what they call “commonsense repair solutions.” As part of the concession, equipment makers are making a voluntary commitment to provide maintenance, manuals, and diagnostic materials for tractors and combines by the year 2021.

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Sounds a lot like Right to Repair, right? Except it’s not— and AEM has made it clear that they won’t support any Right to Repair measure, because it would affirm an owners right to access and modify firmware for the purpose of repair. This despite the fact that the Copyright Office has already affirmed the legal right of the owner to access and modify the software in their own tractors (and they are well on their way to reaffirming and expanding that right as part of the 2018 DMCA exemptions process that’s currently underway, with hearings in April.) The upshot: Right to Repair is quickly gaining speed—and electronics makers who don’t hop on this train now are going to get left behind. Cheers, Kyle Wiens, iFixit CEO, @kwiens Kyle Wiens is the co-founder and CEO of iFixit, an online repair community internationally renowned for their free repair manuals and product teardowns. Launched out of his Cal Poly college dorm room, iFixit has now empowered millions of people to repair their broken stuff. In 2011, he started Dozuki, a software company that is revolutionizing online technical documentation. Kyle is a board member of Softec and the IEEE CE Society. He’s spoken widely on technical writing, cloud computing, self-repair, service documentation, and sustainable consumer electronics at forums like MacWorld, The Intelligent Content Conference, and more. He also regularly writes for media outlets, including The Atlantic, Wired, TreeHugger, Harvard Business Review, and ifixit.org.

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1

Considerations when choosing between free versus equity-based return programs By Felix Johannes Röllecke

Having a lenient return policy is the status quo of the retail sector. However, return hassle and shipping costs are still different across companies. On one end are those implementing a completely hassle-free and cost-free return program, such as Costco, Nordstrom, and Zappos. On the other end are those implementing an equity-based return program, where the cost of return shipping is born by the party who is determined to be “at fault”. Examples includes Amazon, H&M, and L.L. Bean. From a return prevention perspective, the totally free program needs to put the entire emphasize on the pre-purchase stage through efforts such as virtual fitting (online) and store assistance (bricks-and- mortar). The equity-based program can also rely on return costs and hassle to reduce returns.

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More broadly speaking, when deciding between the two types of programs, one should consider the following aspects: 1. Since a cost-free return program stresses the long-term customer experience, how much does it actually increase the Customer Lifetime Value (CLV)? 2. How effective are the pre-purchase return reduction measures? 3. What is the typical condition of returns and how much salvage value can we get? The above is a condensed summary of a recent academic article by Röllecke and his colleagues. WHU– Otto Beisheim School of Management in Vallendar, Germany 1

This recurring series provides plain-English summaries of leading academic research in the area of consumer returns.

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