Why Returns Are Retail’s Biggest Untapped Opportunity with Blue Yonder's Tim Robinson | 5IM

Summary

Omni Talk Retail Podcast Summary
Episode: Why Returns Are Retail’s Biggest Untapped Opportunity with Blue Yonder's Tim Robinson | 5IM
Release Date: January 14, 2025
Host: Omni Talk Retail (Chris Walton and Anne Mezzenga)
Guest: Tim Robinson, Corporate Vice President at Blue Yonder

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Introduction: The Rising Significance of Returns

In this episode, Omni Talk Retail welcomes Tim Robinson from Blue Yonder to discuss the pivotal role of returns in the retail industry. The conversation delves into why returns should be reimagined as a strategic opportunity rather than a mere logistical challenge.

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1. The Strategic Importance of Returns

Tim Robinson emphasizes that returns constitute a significant portion of retail operations, highlighting that "up to 15% of items fulfilled across the US come back as returns and 95% of those items could be resold or full price" (00:27). He argues that returns should be treated as inventory, demanding the same urgency and priority as direct sales.

Key Points:

• Returns as Inventory: Returns represent a substantial segment of inventory that can be resold, reducing waste and increasing profitability.
• Customer Experience: Enhancing the returns process can differentiate retailers in a competitive e-commerce landscape.
• Technological Integration: Leveraging technology to create seamless returns experiences can set retailers apart.

Notable Quote:
"Returns can be a differentiator. Unique returns experiences, the technology you deploy, the experience that provides consumers can set you apart from the rest." — Tim Robinson (00:27)

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2. The Complexity of Modern Returns

Anne Mezzenga probes into why returns have become increasingly complex in today's multichannel retail environment.

Tim Robinson responds by outlining the multifaceted nature of returns:

• Multiple Channels: Returns can originate from various sources, including digital platforms, physical stores, and third-party suppliers.
• Lack of Visibility: Retailers often struggle with inconsistent information about the status and condition of returned items.
• Supplier Challenges: For example, one European customer likened returns to their "worst supplier," citing issues with visibility and item condition (01:54).

Key Points:

• Multichannel Challenges: Managing returns across diverse channels complicates the process.
• Data Fragmentation: Inconsistent data capture hampers effective returns management.
• Operational Hurdles: Lack of insight into return timing and item conditions creates logistical obstacles.

Notable Quote:
"Returns are by their nature multichannel. They come at you from all different directions." — Tim Robinson (01:54)

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3. Best Practices Among Leading Retailers

Chris Walton inquires about how top retailers are successfully managing returns to benefit both their business and customers.

Tim Robinson outlines several best practices:

• Data Utilization: Leveraging detailed returns data to understand customer behavior and item performance.
• Tailored Consumer Choices: Offering flexible return options such as full refunds, partial refunds, and various drop-off points based on data insights (03:02).
• Supply Chain Optimization: Streamlining the process of reintegrating returned items into inventory to maximize resale potential and minimize waste.

Key Points:

• Enhanced Customer Options: Providing consumers with multiple return pathways improves satisfaction.
• Supply Chain Efficiency: Rapid reintegration of returned items boosts inventory turnover and sustainability.
• Data-Driven Decisions: Using returns data to inform both customer-facing and backend operations.

Notable Quote:
"The best retailers in this space take that information and tailor both the choices and the options they give consumers." — Tim Robinson (03:02)

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4. Environmental Impact and the Move Towards Circularity

Anne Mezzenga highlights findings from Blue Yonder's survey indicating consumer concerns about the environmental impact of returns, noting that "55% of consumers that were polled said they were somewhat concerned about the environmental impact when doing a return" (04:26).

Tim Robinson discusses the growing importance of circular economy practices:

• Recommerce Growth: Increasing consumer acceptance of pre-loved items as a viable purchasing option.
• Visibility and Transparency: Providing consumers with clear information about the lifecycle of returned items to foster trust and support sustainability (04:54).
• Future Sales Channel: Anticipates that returns will evolve into a proactive sales channel rather than just a reactive process.

Key Points:

• Consumer Awareness: Environmental considerations are becoming a significant factor in consumer return decisions.
• Circular Economy Integration: Embracing recommerce can enhance sustainability and create new revenue streams.
• Transparency as Differentiator: Offering visibility into the fate of returned items can strengthen brand reputation and consumer loyalty.

Notable Quote:
"The brand that gets there quickest provides visibility and transparency about the second life of that item. They could get ahead of the game really, really quickly." — Tim Robinson (04:54)

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5. Future Predictions: Personalizing Returns Policies

Wrapping up the discussion, Chris Walton asks Tim Robinson to share his predictions for the future of returns in retail.

Tim Robinson forecasts a shift towards personalized returns policies:

• Data-Driven Customization: Utilizing detailed data on SKUs and customer behavior to tailor return policies on an individual basis (06:31).
• Beyond One-Size-Fits-All: Moving away from generic return periods and refund options to more nuanced approaches based on product value and customer loyalty.
• Enhanced Consumer Experience: Personalized returns policies can lead to increased customer satisfaction and loyalty.

Key Points:

• Customization Over Standardization: Personalized policies can better meet the needs of diverse consumer segments.
• Leveraging Technology: Advanced data analytics will enable more sophisticated returns management strategies.
• Competitive Advantage: Retailers adopting personalized returns policies may achieve a significant edge in the market.

Notable Quote:
"The biggest move is going to be around using data. The idea that we can't use that data to offer tailored returns, policies and rules and experiences to consumers is nuts, really." — Tim Robinson (06:31)

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Conclusion: Embracing Returns as Opportunity

The episode underscores the transformative potential of reimagining returns in retail. By treating returns as a strategic inventory asset, leveraging data for personalized experiences, and embracing sustainability through circular practices, retailers can unlock substantial opportunities to enhance profitability, customer satisfaction, and environmental stewardship.

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Timestamp Reference

• 00:27 Introduction to the importance of returns
• 01:54 Complexity of modern returns
• 03:02 Best practices among leading retailers
• 04:26 Environmental concerns and circularity
• 04:54 Future of circular returns as a sales channel
• 06:31 Predictions for personalized returns policies

Transcript

[A]

Foreigning us now for five insightful minutes is Blue Yonder's corporate vice president Tim Robinson. Tim is here to take us through Blue Yonder's most recent consumer returns survey. Tim, first question may be obvious, but I want to get your take on it. Why should retailers be reimagining returns?

[B]

Hi, Chris here. Thank you. So I mean there are probably three key areas. I think the first thing is it's easy to forget that returns are inventory. Up to 15% of items that are fulfilled across the US come back as returns and 95% of those items could be resold or full price. This is inventory. They should be treating them like inventory with the same level of urgency and priority. I think the second thing is the customer experience angle now that E commerce, online shopping is such a big part of the retail experience. Looking at the deed, understanding the details around returns, what consumers want, the sort of experiences they want, but also thinking about your profitability and sustainability is very important in that regard as well. And I think like lots of facets of E commerce as it's evolved over the years, the, the buynet, buy it now, one click experience or you know, new payment methodologies that grow and help grow E commerce. I think returns can be a differentiator. I think, you know, unique returns experiences, the technology you deploy, the experience that provides consumers can set you apart from the rest.

[C]

Well, Tim, I can imagine a few reasons, having been a retailer myself, but what are you hearing from retailers are making returns so complex these days?

[B]

Yeah, I mean that is the killer question for us. It ultimately comes down to the fact that returns are by their nature multichannel. They come at you from all different directions. You know, you remember when you were in retail, some, some of those returns come from digital returns platforms where you have some insight and information. Others, a customer has just ripped a label off of a parcel and filled out a form and sent it back to you. You know, some returns go back to the stor store. Colleagues may or may not capture reasons as to why that return is coming back. It's like truly, truly multi channel. One of our customers in Europe describes returns as their worst supplier. So 15% of all my skus come from this supplier. I don't have any visibility about when they're coming. I don't know what's coming and I don't know what condition it's in. And I think that kind of, that phrase is really kind of describes why it's so complex.

[A]

So Tim, I'm curious, from the chair top which you sit, how are you Seeing the best retailers address returns and how does that ultimately benefit their end consumer or their end customer?

[B]

So I mean, I would say over the last 10 years, lots of time, money and effort has gone into digitizing like the consumer front end. So there's been some great businesses that born out of this desire to digitize the consumer experience. And that feels like in many, many cases, particularly in more mature E commerce markets, that the job is done at that end of the experience. Now it's all about what to do with that information. You're now getting more and more information about returns than you ever were before. Who's returning, where are they returning, why are they returning, what are they returning? The best retailers in this space take that information and tailor both the choices and the options they give consumers. Do you get a refund? Do you get a full refund, partial refund? Where can you take it in order to drop it off? And they're also using that data to make the best supply chain decisions. How quickly can I get this back into inventory and sell it for full price? How can I avoid this item going to landfill and ultimately having the value ripped out of it because the system required me to. So I think it's going to be about, is now about differentiation, the use of data and tailoring both under the hood logistics solutions and supply chain solutions to suit, but also those downstream customer experiences.

[C]

Well, Tim, you brought something up just now that I think is really important to highlight. In the Blue Yonder survey that you did, 55% of consumers that were polled said they were somewhat concerned about the environmental impact when doing a return. And only 27% though, would continue a returns process if they knew that their item would go to a landfill. How do you expect circularity and recommerce to kind of affect how we as consumers look at returns?

[B]

I mean, I hope you know all this, all the signs, you know, the macro signs are that this whole return space will ultimately evolve into a sales channel. Now that is the signs we're seeing. You know, the speed at which consumers are adopting C2C pre loved recommerce experiences in different parts of the world is really encouraging in that regard. You know, it kind of highlights that there is no kind of old world, old school, stuffy stuffiness around buying something that was ultimately, ultimately pre loved. I think one of the key things that the industry is going to need to provide consumers with in the not too distant future is absolute visibility of where your return is going. I think the idea that these items go back into a black hole and you don't see it is something which society is going to rally against as time goes on. But it's like Chris's question earlier on about differentiation. I think the brand that gets there quickest provides visibility and transparency about the second life of that item. I think could differentiate and could win. They could get ahead of the game really, really quickly.

[A]

That's a really, really interesting point that I've never thought about giving visibility to what happens when you return an item and that being a point of differentiation for a retailer. So Tim, we always love to end with predictions and, and you just kind of made one there. But I'm curious, do you have any other predictions in terms of how you seeing how you see RE returns evolving over the next say five to ten years?

[B]

Yeah, I've got one which I've clung on to for a while which is starting to starting to play out, which is generally in most cases, retailers apply a one size fits all approach to returns policies. You know, it's 30 days return policy for everything. It's 30 days returns policy for every consumer, regardless of whether you're a consistent spender, a loyal customer. It's just, it's a blanket policy and it's 30 days and full refund whether it's a $10 t shirt or a $2,000 handbag. The thing that I think the biggest move is going to be around using data. You understand every sku, you understand its price, you understand its value, you understand every customer, you understand their value, you understand their behavior. The idea that we can't use that data to offer tailored returns, policies and rules and experiences to consumers is nuts, really. And that's where I think it will go. I think we're having some fascinating conversations with retailers, particularly in the US at the minute, about using that data to tailor the rules, the returns rules, the policies for you, the consumer, based on what you're buying.

[A]

Wow, Great stuff, Tim. Thanks for joining us.

[B]

Tim.