A shortage of drivers and warehouse workers is about to collide with an historic level of returns, posing new challenges for retaielrs in reverse logistics.
Reverse logistics—the process of returning goods to sellers or manufacturers for resale or disposal—is already a complicated business. But things are about to get worse, according to transportation and logistics experts who warn that a supply chain already in crisis is unprepared for a coming surge in holiday returns.
Returns could hit $120 billion
Optoro, which provides reverse logistics services to retailers, forecasts that U.S consumers will return $120 billion worth of goods between Thanksgiving and the end of January 2022. That’s well above the $115 billion Optoro forecast for the holiday season last year. The National Retail Federation has not released its returns forecast for 2021 as of press time. The NRF estimated the cost of returns for the holiday season of 2020 was $101 billion.
And refunds to consumers are just one of the costs that retailers incur from returns, CapGemini Invent’s Swartz says.
“The other thing that’s really difficult is the processing on the back end. Once I receive the goods, I’ve got to inspect them, I potentially have to repackage them. And I’ve got to get some of them back on the shelf. That all takes labor and I barely have enough labor to get fulfillment done now, let alone get all this inbound processing and all this inspection,” Swartz says.
Lots of third party, reverse logistics providers are available to help with the load, but Swartz notes that “they’re having trouble finding labor as well.”
The environment pays a price for reverse logistics too. Returned inventory creates 5.8 billion pounds of landfill waste each year, according to research by Optoro and Environmental Capital Group, while trucking those returns back to warehouses, stores or landfills emits over 16 million metric tons of carbon dioxide each year.