Retail, Returns, and Reverse Logistics in 2018: Where are we now?

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Now that we’re halfway through 2018, we thought it would be interesting to look at some of the expert predictions made late last year regarding the state of retail.  Maybe you’re experiencing some of these trends, most of which are the result of digital disruption.  One thing is clear, the retail environment is still challenging and continuing to evolve very quickly.

Here are a few of the predictions we heard late in 2017:retail, returns, reverse logistics

  • Physical stores will challenge the proliferation of online shopping or at least slow down the growth. Some categories will continue to experience retail rationalization (closing locations) due to over-leveraged retailers, extreme promotional environment and ecommerce. Traditional stores may see more closures, but innovative retailers will thrive.
  • Brands will continue to build direct-to-consumer (DTC) channels. There are fewer retail outlets, and retailers are selling more of their own products.  Well-funded startups are pushing more DTC for a bigger piece of the consumers spending.  Categories where we see this move include office supplies, auto parts, beauty products, apparel and sporting goods.
  • Buying commodities (things we have to buy and replenish on a regular basis) will move to more e-commerce sales including the subscription models and same day or next day delivery.

 

Impact on inventory levels and returns

Retailers are dealing with all types of returns especially after the holiday seasons.  The returns really hit after the holidays including damaged and unwanted products, outmoded electronics, spoiled products such as food or cosmetics and even counterfeit products are returned to retailers.  It is estimated that 40-60 percent of returns will take place after the holidays. Most experts believe that 8 percent of total sales is the cost of dealing with returns and slow moving or surplus inventory.  E-commerce and DTC sales are increasing the rate of returns and retailers are devoting more and more resources to improve the return process as well as the recovery.  The larger national chain has invested heavily in reverse logistics to help manage the process and improve the recovery.  Many chains cannot afford the upfront investment needed for reverse logistics programs either in-house or through a third-party provider.

Our focus is on improving the return from returns.  The secondary market includes closeout outlets, salvage centers, auctions, donation, recycling and destruction.  The estimate is that $400 billion of product moves into the secondary channels on an annual basis and that the typical recovery is 10-25 percent of the original cost.  Improving the recovery and eliminate the expenses associated with returns and slow-moving inventory leads to an improved bottom line.

 

Where Net Trade can help

Net Trade offers a solution that includes all secondary markets.  Most importantly, our programs include our proprietary trading system.  Our clients turn unwanted assets into advertising audiences. Returns and slow-moving inventory are purchased by Net Trade for up to the full wholesale value, and along with our partners, we can provide end to end solutions including:

  • An immediate sale for up to the full wholesale value
  • Delivery into our warehouses
  • Refurbishment and repacking of “b” goods
  • Donation programs
  • Destruction and recycling
  • Management of the inventory into secondary markets that are approved by our clients to avoid any channel conflicts

Contact us today to learn more about how we can help your retail business.

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