After several years of climbing rates, returns management has reached the level of a crisis within the retail industry. In the United States, the annual value of returned goods is just under $800 billion, a staggering figure that includes the 30% of all online orders that are returned by customers to the original seller or manufacturer. This rapid climb shows no signs of slowing, as demonstrated by the prediction that the global reverse logistics market will reach a value of $954 billion by 2029. Recent research also shows the significant environmental impact of returns, with approximately 5 billion pounds of product added to landfills each year.

When it comes to addressing this overwhelming volume of returns, retailers’ needs are often at odds with those of their customers—a reality that only serves to amplify the effects of the issue for all parties involved. In their attempts to discourage bracketing (when a consumer purchases multiple variations, styles or sizes of a product with the intention of returning all but one), many online retailers now charge a fee each time a customer sends an item back. However, these return fees ultimately drive business away from the retailers that implement them, as customers are far more likely to purchase from online stores offering quick, seamless returns at no additional cost.

As the reverse logistics market continues to expand, the need for a solution that supports both consumers and retailers grows even more apparent. Enter smart lockers, a technology that fulfills the consumer demand for convenient returns while alleviating many of the mounting pressures and costs faced by businesses in the retail space—all while reducing environmental impact.

Increasing Customer Convenience with Smart Locker Technology

It’s clear from the current boom in online shopping that today’s customers prioritize convenience in all aspects of commerce, including (or perhaps especially) when it comes to returning a product for a refund or exchange. Policies that require customers to repackage their unwanted items before dropping them off often present barriers to consumers, particularly those whose choice to shop online stems from having limited time for errands or living a long distance away from the closest storefront.

The inconvenience of making returns has even fueled the popularity of courier services hired to return unwanted items on a customer’s behalf. However, the fact that these couriers are paid to complete a single return at a time (rather than multiple or many returns at once) makes their services prohibitively expensive for customers who might otherwise benefit from this more convenient and efficient process.

Smart lockers, on the other hand, make it possible for customers to complete returns without needing to repackage unwanted items or travel out of their way. While hearing the word “locker” might conjure images of a school hallway lined with metal doors, this association is shifting as more retailers implement parcel lockers as an efficient way to manage order pickups and returns. For customers, the process is simple and straightforward: After indicating their intention to return a purchase, the customer is emailed a personalized code that provides access to a nearby parcel locker. The customer then makes their way to a convenient locker location and scans their code, allowing them to place the item inside.

Once the door to the locker is closed, the customer receives a confirmation receipt for the returned item, which can then be retrieved by a retail employee or carrier agent. Sidestepping the need to repackage items or print a shipping label means that, from a customer standpoint, the entire process can be completed in as little as 30 seconds. Additionally, there are lockers on the market today that also facilitate printing return labels, convenient for a digital-focused generation that may not have access to a printer.

Increasing Operational Efficiency and Additional Revenue

An important cost-saving benefit of the smart locker is its self-service operation, which ensures customers have quicker access to their items without requiring additional labor from store associates. Compared to traditional return procedures, which often pull store employees away from assisting other customers to manually process the transaction, smart lockers allow for automated processing of refunds and increase the amount of time associates can spend on making sales.

Returns made within the store are the lowest cost option for retailers, and returns with smart lockers can provide an easy, self-service way to facilitate this process while also increasing in-store foot traffic. Smart lockers can also allow for an easier process of returning products to the distribution center where, in many cases, items are far more likely to be resold than if they are returned directly to a physical storefront. Once an item is placed inside the smart locker, its SKU indicates whether the product should be returned to a physical store or packaged with other items for a return to distribution. Automating this sorting process not only reduces the amount of time and effort required from store associates but also allows for larger quantities of items to be shipped back to the distribution center at one time—a benefit that lowers shipping costs and prevents stacks of returns from compromising the visual integrity of the store.

The advantages of smart lockers extend to carriers as well, especially those working in an open network. Smart parcel locker solutions reduce the number of stops for carriers by centralizing drop-offs and collections, rather than making individual driver stops. Consolidating deliveries and returns lowers operational costs, as well as eliminates any second or third delivery attempts required when a consumer is not home. Risk of package theft is reduced, and the software that powers smart lockers offers real-time monitoring and tracking with business intelligence reporting. Additionally, smart lockers and open networks contribute to a greener future, lowering the carbon footprint of carriers, decreasing fuel consumption and reducing congestion and pollution in urban areas.

Enhancing Customer Satisfaction

As a relatively compact structure, lockers can be placed unobtrusively inside a retailer’s brick-and-mortar store, enabling same-day pickup of online purchases in addition to an efficient means of making returns. The secure automation, customizability and small footprint of smart lockers also make it possible to install them in a variety of other indoor and outdoor locations, such as street corners, pedestrian malls or inside the entryway of a supermarket—an additional layer of convenience that allows customers to easily incorporate returns into the flow of their daily routine.

For retailers, the improved customer experience enabled by smart locker technology can offer a significant return on investment on its own, as the ease of making returns is increasingly key to ensuring customer loyalty and satisfaction. Statistics indicate 67% of shoppers check the details of an online retailer’s return policy before following through with their purchase, and 92% of consumers will buy from a retailer again after having a positive experience when making a return. With this shift in customer priorities, retailers stand to benefit a great deal from solutions that increase the flexibility of their returns process while lowering costs and preventing fraudulent returns.

As the ease of making returns increasingly becomes a point of competitive differentiation, retailers and reverse logistics providers have a critical need for innovative, adaptable solutions that will prevent the returns problem from spiraling further out of control. With touchless, automated technology and designs that can be adapted for installation in a wide range of environments, smart lockers provide a solution at the intersection of retailer and consumer needs, offering retailers a cost-saving approach to returns that can be incorporated more seamlessly into the daily lives of consumers.

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Austin Maddox
Austin Maddox is Executive Vice President of North American Parcel Locker Solutions for Quadient. Austin is passionately committed to helping retailers, carriers, universities, office buildings and apartment communities address their unique customer experience challenges as they relate to increasing volumes of inbound and outbound packages.