Managing returns and excess inventory is unavoidable. It’s how retailers handle them that determines their company's success.

Returns are a $760 billion challenge, and this problem is still growing. The solution is to analyze the challenge of returns from both sides: make sure policies are affordable and competitive and find ways to manage costs sustainably.

So, what is the solution to the returns problem?

FORMING THE RIGHT PARTNERSHIPS

As a reverse logistics company, it’s our job to tell retailers how we can benefit them by minimizing costs and sustainably maximizing recovery. 

As retailers look for ways to work on their ESG goals and ultimately raise their bottom line, forming partnerships is one of the best solutions. We all know this, but how do we let retailers know this is a great option? Retailers need to find a reverse logistics partner fueled by sustainability, not one that only talks about it.

Channel Control Merchants’ consumer survey report shows that 40 percent of customers are more likely to shop at stores that sustainably handle returns. Instead of sending returns to landfills, retailers can embrace an option that will align their business interests with the emerging customer sentiment.

If retailers have yet to consider the benefits of a strategic partnership with a reverse logistics company, now is the time. Once they begin to look for a potential partner, prepare to answer the following questions:

1. What will happen with our returns or unproductive inventory?

2. How will you protect our brand?

3. Can you provide detail and metrics on what happens to our products?

4. To whom are you selling our products?

5. Will you provide data to support our company’s sustainability initiatives?

Make sure they know that reselling an item can help recoup lost profit from the original return and improve their sustainability footprint with a partner that can track where that inventory is resold. To ensure maximum recovery for their inventory, precise and transparent scan-based SKU-level data is the way.

KEEPING IT GREEN

Consumers increasingly want green or environmentally friendly products and consider a company's sustainability efforts and environmental impact before investing. The National Retail Federation (NRF) has reported that 80 percent of consumers say that sustainability is essential to them. People want to protect the environment, and their purchasing habits demonstrate this—whether they buy sustainable brands or organic goods manufactured from recycled materials.

The more consumers are educated about the problems we face with excess inventory, the more likely they are to shop with retailers addressing it in a sustainable and environmentally friendly way. The necessity of more retailers partnering with reverse logistics companies is becoming more relevant as consumers realize how big of an issue this is, especially with sustainability initiatives becoming more prominent.

In a Forbes column about consumer demand for sustainability, almost 100 percent of retailers believe that consumers rank brand names higher than product sustainability when, in fact, 56 percent of consumers rank brand names as somewhat necessary compared to sustainability. In other words, how retailers manage unproductive inventory matters to the consumer.

It’s time to get creative with excess inventory and returns rather than turning them over to liquidators and resellers with no tracking metrics, disposing of trash in a landfill or burning it. Customers want a more sustainable approach.

Sustainability is the remedy that reduces costs and strengthens their competitive advantage.

THE RETURNS SOLUTION

Effective reverse logistics management is essential. The solution to returns is adopting a vertically integrated direct-to-consumer company model. It closes the loop by having physical stores to sell and the true end-to-end solution in that retailers can track their returns through to a consumer sale in a sustainable way.

As an example, our solution at Channel Control Merchants kept 80 million items out of landfills in 2021, representing products with more than $2.4 billion in retail value. This inventory got a second chance with customers, extending the life of those products and delivering authentic metrics to retail partners for their sustainability mission through our owned and operated brick-and-mortar extreme retail stores: Dirt Cheap and Treasure Hunt.

An end-to-end solution is the answer. A closed-loop reverse logistics solution makes the supply chain more efficient and becomes a critical part of a company’s ESG initiative.

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Chris Homewood
Chris Homewood is the CEO of Channel Control Merchants (CCM), a fully transparent solution for returns management and excess inventory that extends its partners' ESG efforts. CCM maximizes recovery by creating a closed loop that is a total solution for returns and unproductive inventory down to the consumer. The company's network of retail stores gives products from leading retailers and manufacturers a second chance, selling them quickly and directly to real everyday people. Learn more at ccmllc.com.