‘Real pressure on supply chains’: How major players are balancing costs, speed and a new retail world
‘Massive volumes of returns’
Reverse logistics came to the fore last year as well. More online shopping than ever before meant more returns. The NRF has estimated that consumers returned $428 billion worth of merchandise in 2020, or about 10.6% of all retail sales that year.
Retailers that, amid the temporary closures, pivoted to being digital-first businesses also had to quickly adapt to the volume of returns coming in.
At American Eagle Outfitters, that not only meant a larger volume of returns, but those returns were coming in from different points than in the past.
After the retailer closed its stores in March 2020 and pivoted to online sales, American Eagle’s two U.S. distribution centers soon were deluged with multiple weeks’ worth of backlogged returns that normally would have entered the supply chain through the company’s stores, according to Brandon Friez, vice president of supply chain transformation at American Eagle.
“Our distribution centers weren’t really equipped to deal with massive volumes of returns coming,” Friez said at another panel during NRF’s virtual conference. “So on top of the growing e-commerce business, the growth of returns, we really outgrew the systems that we had in the distribution center.”
American Eagle, working with Optoro, which sponsored the NRF session with Friez, worked to speed up the time between a return initiated by the customer and a product moving back into stock for a resale, as well as to understand why customers were making returns in the first place. Friez said the span between an item being returned and restocked went from a multi-week process to a multi-day process.
Today, “returns are coming in, they’re being re-commerced immediately,” Friez said. “We’re doing a level of editing on the returns to kind of filter out items that may be unsellable, and then we have a reprocess prompt to get those items back and sell them as soon as possible. That’s been hugely successful for us to help reduce markdowns and raise [Average Unit Retail] on the resale of goods.”