How Reverse Logistics Makes the Retail Cycle Go Around

National Retail Federation

November 8, 2023

Retail Gets Real episode 324: Tony Sciarrotta of the Reverse Logistics Association talks about where our returned items go and how retailers are finding new ways to resell

What happens when a customer returns items to the retailer? There are many possible routes based on the product and the retailer, but the worst case scenario is that returned items eventually end up in landfills, explains Tony Sciarrotta, executive director of the Reverse Logistics Association, on this episode of NRF’s Retail Gets Real podcast.

Those returned items also cost retailers. NRF estimates that consumers returned $816 billion worth of retail merchandise in 2022. “The trend line is not good, and that’s why reverse logistics has to be focused on more than just the movement of the goods,” Sciarrotta says.

Investing in a circular economy isn’t just better for the planet, Sciarrotta explains, it’s better for customers and the bottom line. Just as car companies and electronics manufacturers have figured out a way to refurbish, service and resell used items, fashion retailers and manufacturers are also looking to create secondary markets for their clothing items.

“I love companies like Patagonia, North Face, Columbia, Adidas, Nike. They’re taking the stuff back as well,” Sciarrotta says. “If companies start to examine, and especially the retailers, if you start to examine your end-to-end costs, and then weigh it against the business opportunity to create your own secondary market, you’re going to start reaching customers that you may not have reached before.”

Even retailers that don’t necessarily want to create their own secondary sales platform can “at least find a partner that you can trust to use it for a secondary market reseller, rather than watching that stuff go to landfill,” Sciarrotta says.

“They hire people in a returns warehouse to separate the good from the bad, from the ugly. They can resell the goods on Facebook Marketplace, on Craigslist, on eBay. There’s such high demand for it.”

Another important aspect of creating a more sustainable cycle is making sure items aren’t returned in the first place. In many cases, consumers return items because they don’t live up to the marketing or advertising display or the instructions are too difficult to read or follow. “The focus has to be also on improving that customer’s experience, and that’s where the retailer plays in,” Sciarrotta says. “What was on the shelf at Walmart or any other retailer stores with the little bullets, the stars of what the product’s all about, that makes a difference.”

“I love the engagement that NRF is helping promote and that we are starting to see more of figuring out how to take care of the customer. Making them happy doesn’t mean making it easy for them to return. Making them happy means exceed their expectations,” Sciarrotta says.

Listen to the full episode to learn more about where our returns go, how reverse logistics fits into the circular economy, and what retailers need to know about this increasingly important area of retail. https://nrf.com/blog/how-reverse-logistics-makes-retail-cycle-go-around