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Author's profile photo Panagiotis Papadopoulos

How we approached the Challenge of Returns Management!

Returns are given top priority.

The truth is that ecommerce is fast developing, and when we looked into the processes, we realized that returns are becoming a growing problem. There is a kind of bullwhip effect, as the rise is due to an increase in ecommerce and an increase in returns. Our surprise was that certain customers saw their return rate grow from 50% to 60%, which astonished us. Furthermore, we’ve discovered that many retailers optimize only a piece of the process and don’t follow a consistent strategy.

The fact that returned goods commonly end up in landfills is another sign of inefficiency! In order to increase efficiency and build new business models, we have given specific attention to this part of the process. Returns and sustainability go hand-in-hand; we believe there’s a lot of progress to be made.

Empathy for the consumer and the Retailer

Consumers and retailers were surveyed extensively during our research. Over 30 return management professionals were interviewed for this, as well as a sizable number of consumers. This was critical to our comprehension. As a result, we divided the entire process into four sections.

The first area is the start of the returns process, or more specifically, the customer experience. It is critical at this point to provide the customer with options. Simply including the return voucher with the parcel no longer appears to be a viable option. For our retailers, making a dynamic decision based on the cause for the return as well as the customer’s location was critical. Returning to the store, the direct return to the supplier or even a shipment to a specific location are practices that they would like to establish.

Second, the dispositions handling allows to classify returns and make appropriate decisions! This can subsequently result in a product being resold directly, having to be refurbished, having to be repaired, or even being recycled in the most extreme case scenario.

The third area is reporting, which our customers have specifically mentioned to us because they do not currently have this capability. On the one hand, an examination of returns can lead to the improvement of the product description in order to reduce the number of returns, and on the other hand, the detection of a fraud!

The fourth aspect is the new opportunities brought about by the adoption of a mature returns procedure. Repair services, product rentals, and trade-ins are some of the examples highlighted by our interviewees.

Expectations of Consumers

As promptly as feasible, customers should be able to return items. There should be no difficulty locating information on how to return an item, as impulse purchases are more likely when a merchant is more friendly to returns.

 Clarity in strategy and speed in reimbursement are key. The consumer should also be made aware of the environmental impact of his behavior, and how he may lessen his carbon footprint is an important consideration. An item exchange can be sent to a store, or products from multiple orders can be returned together.

Benefits using a SAP’s returns solution

Retailers we’ve spoken with are eager to cut costs first. They are aware that they must be extremely tolerant of the issue, but the problem has grown so large that they wish/need to take action.

We developed the solution in collaboration with five customers from the apparel, luxury, and home improvement markets. We were able to validate our assumptions and developments very rapidly by evaluating the progress every two to four weeks. Of course, this is fantastic for agile development!

We have had important discussions about the possible disposition of items in the warehouse, the store, or at an external partner, as well as the accompanying best next steps to be taken. For example the precise classification and efficient configuration of the possible follow-up processes allow for a positive margin contribution in the case of product resale.

Keeping an eye on the four areas and offering as much technical assistance as possible is what we’ll be doing for this purpose. As a company, you want to make sure that your customers have a nice experience and, of course, that return logistics go smoothly because there is still a lot of space for positive margin contribution. SAP has a lot to offer check out our SAP Intelligent Returns Management and have a look to the end to end demo !

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      Author's profile photo Ulrik Nicolaisen
      Ulrik Nicolaisen

      All the image links are dead on this page. Could you please fix that?

      Author's profile photo Panagiotis Papadopoulos
      Panagiotis Papadopoulos
      Blog Post Author

      Ulrik, thank you for letting me know. It should be fixed know! BR Pano