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Saving billions by making smart re-commerce decisions

Online shopping results in return rates as high as 30%, according to reverse logistics specialist Optoro. Not surprisingly, the coronavirus has sparked an e-commerce boom in various markets but that brings consequences further down the line.

In the US alone, goods worth over US$ 400 billion (EUR 366 billion) are returned every year, reports the National Retail Federation. A total of 5.1 billion items are returned annually, which could grow to 8 billion by 2025.

The recent stay-at-home months have contributed to a significant spike in online spending. In the US, consumers bought around 35% more clothes in March and April compared to the same period last year.
The sectors with the most growth are;
• Homewear & pyjamas (143%)
• Groceries (+110%)
• E-books (+100%)
• Alcohol (+75%)
• Electronics (+25%)

Optoro points out this also means more products will be sent back, underscoring the importance of sustainable e-commerce solutions. What does this mean?

The company has created proprietary technology as well as a smart online portal called Returnly to route returned goods to the best available channel. This reduces both financial and operational costs while boosting product lifecycles and diverting material from landfill.

Fun fact: Optoro has saved 2 700 tonnes of products from landfill while donating almost four million items to charity.

Be flexible, like Ikea

‘Retailers using our solutions were able to keep over 95% of their returned and excess inventory out of landfill in 2019,’ says Optoro’s marketing vice president Larisa Summers.

‘We exclusively work with certified downstream partners who refurbish, harvest parts or properly recycle any products that cannot be resold or donated,’ she adds. ‘Retailers who provide flexible returns drop-off points or kerbside pick-up options will gain favour with customers long term.’

One of the company’s major new clients is Ikea. The partnership involves 10 of its US distribution centres and 50 US stores with the potential to expand the pilot to other countries in the future.
‘We’re on a mission to become a circular business by 2030, and we need partners like Optoro who can help us achieve our goals,’ says Javier Quiñones, president of Ikea Retail US.

Back into the loop – quickly

Depreciation levels for returned products differ by product type. When it comes to electronics, products can lose around 10% of their value per month, observes Optoro researcher Sarah Foulke. For fashion items, this ranges from 20-50% in the first three months after being rejected. Acting fast is vital.

Global leaders attending the annual World Economic Forum in Davos were amongst those calling for a circular loop in e-commerce. ‘Shipping, transport and the supply chain as a whole can make a successful transition to a low or zero carbon future and contribute to global sustainability,’ stated Kitack Lim, secretary general of the International Maritime Organisation. ‘Reverse logistics is key to the effort.’

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