The National Retail Federation’s landmark tradeshow, NRF 2024: Retail’s Big Show had an incredible turnout with more than 35,000 attendees. It was a tremendous success and the perfect way to solidify a strong start to the year. goTRG's team connected with enterprise retailers, SMBs, and3P sellers, showcasing our new SaaS, reverse supply chain, and ReCommerce capabilities, all aimed at maximizing profit recoveries and enhancing the post-purchase customer experience.
A big highlight from the show was the “ReThinking Returns” panel goTRG participated in with Patrick Murphy from Walmart, Tony Sciarrotta from RLA / NRF, and Steve Rop goTRG’s COO. The panel was moderated by Sabrina Escobar from Barron’s. The insights shared on tackling returns and issues such as returns fraud and overstock inventory helped bring attention to new trends that leverage the power of AI to enhance efficiency in the return process.
Key highlights from the panel included Mr. Rop discussing shifting trends in the retail landscape. For the first time in history, the returns problem has decreased from $816 billion in profit loss in 2022, to $744 billion in 2023.This should be interpreted not as a reduction in market size, as to the contrary retail and online sales have grown an estimated 4% to 6%, but rather as a strong indicator that the investments retailers have made to change policies and prioritize their reverse supply chains are paying off.
In the past year, retailers have demonstrated a concerted effort to prioritize assessing and implementing new strategies to minimize losses from returns. According to Mr.Rop, the decrease in returns is likely due to enhanced fraud detection systems, more robust return policies, and the implementation of return fees. These moves are designed to discourage fraudulent returns and encourage more thoughtful purchasing.Economic factors are also influencing consumer behavior. With the anticipation of a recession, shoppers in 2023 appeared to spend more cautiously, therefore making more intentional shopping decisions.
Retailers are deploying innovative returns strategies via dynamic returns software with features like keep it, trusted customers, partial refunds, instant exchanges, instant credits, additional drop-off options, and more. This enhances the post-purchase experience by offering the customer additional convenience and choice for their desired returns. Ultimately, the retailer can improve retention rates by up to 30%, and save the sale by converting refunds into exchanges, store credits, or partial refunds. Furthermore, the right returns service provider, such as goTRG, can also help combat the $101 billion in fraudulent and abusive returns with the help of intelligent detection, identification, reporting, and prevention capabilities.
Mr. Rop also pointed out that profit loss extends beyond returns with overstock inventory being a major contributing factor. Overstock inventory represents as much as $400 billion annually, in addition to the $744 billion in returned products. With the problem of returns and the excess of overstock inventory combined, the industry is looking at an opportunity that surpasses a trillion dollars and is ripe for disruption.
During the panel discussion, Mr. Murphy from Walmart emphasized the retailer's customer-centric return solutions aimed at fostering loyalty and simplifying the return process. Walmart's initiatives include a one-year return policy with free shipping and various convenient return options, such as curbside and in-home collection.
In the face of $101 billion in losses due to return fraud, Walmart is leveraging data to streamline and understand their returns process, from purchase to reverse supply chain. This comprehensive data approach enables Walmart to enhance the customer experience and determine the most profitable handling of returns.
Mr. Sciarrotta from the Reverse Logistics Association (RLA) which was recently bought by the National Retail Federation (NRF), spoke about the strategic use of fees to manage return rates and the importance of distinguishing between loyal customers and those who might abuse return policies. He also emphasized the importance of being as efficient as possible when it comes to receiving the returned products to get it back into inventory or the secondary market.
Wrapping up the panel, Ms.Escobar guided the conclusion to center on the year’s hottest topic ubiquitous across all industries regarding the role of Artificial Intelligence (AI). While goTRG has already begun integrating OpenAI's Chat GPT Enterprise for predictive analysis in returns management, Mr. Rop suggests that we're still some years away from AI reaching its full potential in the field without human oversight or intervention.
As the reverse logistics and returns management industry evolves, AI strategies are being developed to improve backend return processing and drive cost efficiencies. Mr. Rop sees a future where AI could redirect returns even before they're dropped off, saving on the costs associated with multiple handling.
The future is bright for retailers as we are already beginning to see the results from partnering with a dedicated returns management service provider that helps to reduce returns, meet sustainability goals and increase profitability. As 2024 unfolds, we predict there will be a stronger focus on fraud mitigation and stricter return policies. While returnless ‘keep it’ privileges may be saved for only the most trusted and valued customers.
