Optoro wrangles post-holiday gift returns in sustainability pitch

Retailers and e-commerce buyers aim for sustainability as consumers think about returning, exchanging, and refunding holiday presents. Caroline Turner, Optoro Client Development SVP, joins Yahoo! Finance’s Dani Romero for more.

 As you were looking at that Christmas gift and deciding what you’re going to do with that poodle-hair sweater with the iguana lining on the inside, you’re probably going to return it. And there’s this term reverse logistics. That’s the– the term with the companies like Optoro which help the big companies figure out how they get that poodle-hair sweater out of your hands and into someone else’s.

Let’s bring in our guests right now to talk about all of this. Caroline Turner is Optoro Client Development Senior Vice President, and Dani Romero is our reporter who covers this stuff. I’m going to take the first question here, Caroline, because I saw you smiling when I talked about the poodle-hair sweater, but there’s a ton of stuff that’s about to get returned. Are we going to break records?

CAROLINE TURNER: We may, and welcome to return season. Between now and the end of January, nearly over half of consumers are going to return at least one item. That’s going to equal about $120 billion worth of goods. And this is a lot that folks have to cope with as we– especially as we’ve seen the rise in e-commerce.

We know that on average, folks return items at a rate of 10% during the year, 13% during the holidays. But if you’re buying something online, your likelihood to return that is three to five times higher. And we’re continuing, of course, to see e-commerce and digital sales rise, so yeah, it could very well be a record year.

DANI ROMERO: And Caroline, are these retailers really equipped to get these returned products?

CAROLINE TURNER: No. I mean, I think it’s difficult. When you think about getting an item out the door, folks know what that looks like. They’ve got a new item. They package it. They ship it out, and it all looks the same.

But every item that comes back has its own unique story. And I think, you know, a lot of distribution centers are not set up to take those items in. And you may have experienced yourself with long delays in getting refunds or not hearing back from a retailer. Gosh, where is my refund? Folks are really struggling.

And so– and the companies that are being forward-thinking about this are trying to accelerate refunds. We know that 40% of folks that don’t get a refund within a week think it’s too long. We’ve all been trained by Amazon and Zappos to get refunds immediately, to have convenient drop-off locations. And so the bar has been set to provide folks this exact same experience, but not all retailers are set up to do that.

DANI ROMERO: So I guess a follow-up to that, does this return merchandise actually go back to the retailer’s warehouse? Where does it go?

CAROLINE TURNER: Yeah, it can. It depends lots of times it does go back to a retailer’s warehouse. We at Optoro manage returns for folks like American Eagle, so it comes back to our warehouse or their warehouse. Depends on kind of what works best for them.

But let’s say it goes back to their warehouse. Then there’s technology that Optoro uses to help process that refund as fast as possible. It helps then also list that item back on that website as fast as possible as well. You can imagine with supply chain shortages, if there’s a hot item that somebody bought two of and returns one, you want to relist that as fast as possible. The technology that we provide allows folks to do that within one day– within– within the same day as it ends up in their distribution center.

DANI ROMERO: So I guess, how long does it really take for that returned item to resell again then?

CAROLINE TURNER: Yeah, so I think for normal processes with folks that haven’t really put technology against returns, it can take up to three weeks to receive that into a warehouse, to process it, and to relist it. When using technology like Optoro does, it can be done within 24 hours.

 By the way, just for the record, there really are poodle-hair sweaters out there. I was googling it, and no thank you. But you point out something about return items that are online actually create a larger waste stream than if I take it to a brick and mortar. Is that because I got to ship it back to them in a box? Or is there some other reason?

CAROLINE TURNER: Well, I think one of the reasons is you just don’t have that tactile experience of trying something on or feeling– feeling the fabrics. That is why the returned items are higher. I think also folks have gotten used to using the bedroom as a dressing room and so will order multiple sizes of something just to see what fits. And as more companies are offering free returns and longer return windows, this is a very accessible option for folks. So two big reasons are for that.

DANI ROMERO: And Caroline, you know, what would you say is the biggest challenge for your industry? Because I know this has happened to me before where you buy something, and the return process is such a hassle that you’re like, I’m no longer going to shop at this specific retailer anymore. What would you say will actually smooth this process a little easier?

CAROLINE TURNER: It’s a great question. You know, consumers are looking for a couple of things. The biggest one, of course, is taking that hassle out. So what consumers say that they want, you know, they want a convenient, third-party drop-off location, you know, taking something to a Staples or a UPS. They want to bring a QR code as an example and not have to do the arts-and-crafts project of packaging something up, finding the tape, printing out the label.

They want to bring that poodle sweater directly to the counter there, have one of their associates scan it, and they box it up and send it back. And they want refunds within a couple of days. I think folks that are doing this are really looking at the full consumer purchase journey and saying, it’s not just about pre-purchase, but it’s also about post-purchase. How do I make folks’ lives much easier to generate that return?

The other thing that folks are getting very good at too who are forward-thinking is the exchange process, being able to make it much easier to trade in that size 8 shoe for the 8 and 1/2 and not having to wait for the full return to get processed. So we’re seeing that folks who are really cutting-edge are allowing that exchange to happen before that size that didn’t fit is returned to that company’s return center.

 Caroline Turner, you are not only a trooper for putting up with my very stale jokes but also explaining how reverse logistics is becoming a booming business. Caroline is Optoro’s Client Development Senior Vice President, and thank you for joining us. Dani Romero will be writing about this and how it works going forward.

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