C (2:38)

I am ready to say welcome to not only a fantastic colleague, but a very generous representative of Richard Return Pro. So let's bring him on.

B (2:46)

Let's do it. So our featured guest is currently the chief Strategy officer for Return Pro, a rapidly growing organization that's one of the leading returns management platforms in industry today. Now, prior to that, he oversaw the development on the operation of the return and repair operations for two of the largest retailers in the world, Home Depot and Walmart.

A (3:08)

How about that?

B (3:09)

Our guest has been involved in the reverse of logistics industry for over 20 years and is considered one of the foremost experts in the field. In 2022, our guest rightfully received a lifetime achievement award from the Reverse Logistics association for his contributions to advancing the reverse logistics and returns management industry. With all that said, let's bring on Chuck Johnston, Chief Strategy Officer for Return Pro. Hey. Hey, Chuck.

A (3:36)

How you doing? Hey, how are you doing, Scott?

B (3:39)

Wonderful, wonderful. Great to see you.

A (3:42)

Good seeing you all.

B (3:44)

So the three of us, I mentioned the Reverse Logistics association, folks. You should go check out the rla.org by the way, Chuck, Claudia and I were all in Dallas with, with a bunch of movers and shakers across the space. We'll touch on that here in a minute. But before we get there, Chuck and Claudia, I got a fun warm up question to share with you both. It's International Coffee Day. It's World Vegetarian Day, and I am. I love fried tofu, by the way. If you hadn't tried it. Hey, don't sleep on that. Go check it out. It's National Homemade Cookie Day. Oh, man. Homemade chocolate chip cookies. But all that aside, because on this day, let's see, October 1st, back in 1982, the first commercial compact disc player went on sale in Japan. So that begs a question as I stare at a device I had way back in the day when it cost way too much money. What is one cd, Claudia and Chuck, that got played millions of times in your car, your home, the gym, or whatever. And Chuck, we'll start with you. What comes to mind.

A (4:48)

Probably the most often played on my part was Earth, Wind and Fire.

B (4:52)

Okay. Earth, Wind and Fire. I just saw the. They're still touring. I saw them on. I'm so impressed. That's a good one. All right, Claudia, how about you?

C (5:03)

But funny thing is that in 1982 is when I arrived in the United States from Argentina.

B (5:08)

Wow.

C (5:09)

Okay. My cultural experience was girls just want to have fun. Cindy Lauper.

B (5:15)

Oh, that's a Hall of Famer. That is a Hall of Famer. Y' all had some good ones there. All right, so let Me see if I can marry some of mine with some of yours there. So Shake your Moneymaker by the Black Crows is one of the early CD I played that to death, the Low End Theory by A Tribe Called Quest, which is legendary now. And then, finally picture this, driving around in our Chrysler minivan, had braces on in the way back. My mom would always play the Judds. Why not me? I know every song on that album and probably can sing it, which I'm not gonna do that to. Y' all here today, but good times, Chuck and Claudia. So we got a lot to get into here today. Yeah, let's start with this, Chuck. So you're a really humble individual and I really appreciate that. But you're a hall of famer in the industry and it's so great to have you here sharing your observations and expertise with our audience. Great to have you. And Claudia, by the way, I shared a little bit about your journey, but if you would share a few more highlights from your incredible career thus far.

A (6:16)

Well, I mean, I started, went to West Point, so I started in the military and migrated from that to the defense industry and then decided at one point in time that needed to get out of defense and went to a small company up in northwest Arkansas called Walmart.

B (6:32)

Right.

A (6:32)

And started there is the. In the design and construction of warehouse. So it was, you know, doing mostly forward logistics, but right at the outset of grocery and we were doing a lot of regional distribution centers. But at that time, Walmart had two return centers. And it was. I think I've told story before. Everything was being done on yellow notepad and stubby pencil and they were just recording and tallying. And then there was a phalanx of finance people that were doing the credit memos to all the retailers. And as part of the design and construction, I said there's got to be a better way to do this. And early 1995, when I was engaging it from the engineering side, we designed as automated as you could at that time, an automated system with conveyors to try to. To build some efficiencies in the process. And it was at that time there was an opportunity to move and be responsible for operations of that. And I volunteer to go into return. Nobody. Nobody wanted returns. I volunteered. Wow. Because I always thought it was a very entrepreneurial area, an area that had such an opportunity to pave a way, you know, from an industry standpoint. And so early on, that's, you know, kind of what drove me to that. That industry. And then I got involved with even before Tony with the, the, the Reverse Logistics Association. I've been on the board all 20 years.

B (8:07)

Wow.

A (8:08)

And tried to be an ambassador for the industry because I've always saw it as a very important industry, very underserved. But one I knew was, you know, was going to grow and, and expand and I was blessed in to spend time, a lot of time at Walmart, retired there, went to Home Depot and did the same thing at Home Depot and retired again and then decided, you know, I'd go and start with a company which was trg, then go TRG and now return. So I've been in the industry a tremendous amount of time, but I think, you know, again, if you speak legacy or what do you want to be known for is just that the passion I have for the industry and the ability to get others engaged in it from three PL providers to whoever and hopefully have been a voice to promote the industry and talk about what can be done, what's next.

B (9:05)

Yes, Chuck, you've served that mission well. I would say in my. I have known you for 20 plus years, but I think you joined us for the first time four or five years ago, if I'm not mistaken. And in that short time it's amazing the ambassador you've been. And Claudia, we heard a lot there from Chuck. I want to go all the way back to the yellow notepads and pencils because a lot of supply chain stuff has gotten done by those tools over the years. But he also spoke about passion. He spoke about of course Walmart and Home Depot, which now thankfully largely the Chuck and other leadership, they've got advanced approaches when it comes to returns management, reverse logistics. But what'd you hear there from Chuck?

C (9:41)

Claudia, A couple of things that are very interesting and I relate and I applaud your summary of your journey. You have the elements of what is constitutes a visionary soul, a visionary person. You talked about understanding how things work. So from an operational perspective, also your desire to volunteer and step into areas that perhaps are less known and looking back now, you see that you have gone through the process of really designing a solution. So my hat is off to you. I don't have one, but if I had one, really designing from the inside out. And I believe that that is the spirit that is necessary to make change and you know, innovate. You have to have that spark. You have to have the knowledge. And at the end, as we all know, it's all about the letter R relationship.

B (10:36)

Yes, yes. And I bet I didn't know you went to West Point, Chuck. Claudia, that's a great summary. But I bet your volunteerism was certainly encouraged by your time at West Point. It seems like all the West Point cadets go and do big things in life. So Chuck, really quick follow up question before we shift over to what more folks should know about returns and reverse the whole whole enchilada. Chuck, if you didn't go into, if you didn't raise your hand and volunteer for the reverse logistics, returns management space, what would you have done with the rest of your career?

A (11:10)

Well, the interesting thing is I entered the military and I was blessed that we weren't in any conflicts. The downside of that is we weren't in any conflicts. And so the mission of the military in my mind wouldn't necessarily be being served. So I ended up getting out. If had things been different, I probably would would have stayed military as a lot of my classmates did. But moving into, you know, I always stayed on the engineering side but I had opportunity to go in the operations and like I said returns was just more entrepreneurial. So he's more, you know, I'm not like, you know, I appreciate people like Sendra Shamas that with our company and others that move that entrepreneurial spirit that created companies, I just, you know, within a very enterprise organization, I just saw it as a great path.

B (12:00)

I tell you what you mentioned Cinder and I think we all know Cinder Shamas, the CEO of Return Pro, I guess the founder as well. It is amazing. And Claudia, we had a great time on that tour at the RLA leadership event out in Dallas, didn't we Claudia, I saw you were, you were in action. You were the front end asking questions. You almost leading the tour yourself, Claudia, huh.

C (12:23)

I have a jacket that says tour guide. Return Pro sender is a. In full disclosure, Return Pro is a donor to our nonprofit organization in Yell Green. And we are so grateful for that. And I believe that my enthusiasm really is a reflection of the organization that we saw on that site. Site visit well run happy people dealing with imperfect inventory. Creating impact, using technology. And that is what one of the many benefits of being able to go to events organized by organizations like RLA or the National Retail Federation. So yes, and the last time I saw Chuck, he was also guiding the tour and making sure everybody left the building.

A (13:12)

But you know, it's. Claudia, it's more than being a practitioner. You, you gotta be an ambassador and you gotta have passion in this industry. If you don't, don't get into it. I mean really don't get into it. It is a very nuanced business and as Tony has said, it is the, if you will, the dark underbelly of supply chain. So if you don't have passion for it, probably best served go somewhere else.

B (13:37)

Well, I'm glad to rub elbows with two business leaders and the two of y' all that have lots of passion for it and are doing big things and you know, we're trying our best to shine a a bright light into that dark underbelly space because of the opportunity and the challenges we have. And that's kind of where we're going to go next here. CHUCK so according to NR figures and I should have had this in front of me, but I want to say about $875 billion in returns last year in the US alone. Claudia and CHUCK so it's almost a trillion dollar problem just in the US when it comes to returns. What should given that and so much more, what should more supply chain professionals and consumers know about the return space?

A (14:16)

CHUCK well, I think the important thing is the NRF records that number that says it's 890. But it doesn't tell the whole story. I mean what is return to a retailer is not necessarily doesn't always end up, if you will, in the secondary market. There's a lot of touches, some goes back to stock. I think the biggest challenge we have now is last year was the first time that E Commerce sales or returns outpaced big box returns. And it's a tremendous problem there for retailers in that if you look at 60% and you've heard probably heard the term Boris by line return in store, 60% comes back to the store. So anybody knows retail, you know, retail space and the way you manage in the planograms is very important. And to have all these items set up when you get 6%, it's lovely to have the extended aisle that E Commerce provides. But then the challenge is 60% that's coming back to your store who's not traded for those items them. So what do you do with them? And that's where technology can continue to improve to says how does a consumer know that? Does that exist in the retail store? But the biggest challenge is it's just when you talk about the costs associated with the returns, anywhere from 20 to $30 for the, you know, the average return because of freight and everything else. It's critical for being able to have someone who can within your organization articulate be able to capture all those costs because, you know, you know, one of the later, you know, I know questions is why Are people more people investing in it? A lot of them don't understand what the total costs are. What, you know, my customer service, my returns desk, the movement of product within the store, then they've got it has to go somewhere and then subsequently processed and then it goes maybe to the manufacturer. There's a tremendous amount of cost associated with the reverse supply chain.

B (16:22)

Yes.

A (16:24)

That foreign people just don't see and don't understand.

B (16:28)

Hey Claudia, on that last point, Chuck's making is a good one. It reminds me of an earlier part of my career where I was working with Cisco, the big multibillion dollar food company. Right. And we worked with a lot of mom and pop independent restaurants to help them be more successful. Food products, menu options, planning, plates, logistics, whole nine yards. And took in a similar note. There were so many restaurant owners that didn't know the true cost of the plate of food that you found on their menus. So they were kind of pricing blind a bit. Oftentimes not to pick on anybody. It was just a challenge in the industry. And it seems like there's a similar challenge in the return side in the industry, kind of to Chuck's point. But Claudia, what'd you hear there in terms of what more supply chain pros and consumers got to know about the return space?

C (17:15)

Focusing on the idea of opportunity because the market is so diverse. The market is everywhere. Whether you are a distributor or a manufacturer, no one is immune to this issue. So focusing on that, what I am hearing Chuck describe is this shift between this reverse logistics and returns from a cost center to perhaps becoming ideally a strategic value proposition.

A (17:41)

Yeah, yeah.

C (17:43)

Would you say that, that that's really the challenge?

A (17:47)

Well, the challenge with any enterprise retailer is to be able to articulate the value prop. And that's where it gets, it gets so blurred because of where cost, whose P and L certain activities are on.

B (18:02)

Right.

A (18:02)

These successful people will go in and partner with merchants, partner with the supply chain, partner with finance to say let's build the case. Let's understand how much this really is costing us to understand how important it is. Because at the end of the day, returns complete with stores compete with supply chain for capital dollars and have to show a return on investment. And that's, you know, a lot of times in the history of returns, that's why they've never gotten a lot of money is because they can't articulate the value.

B (18:35)

Right. Well, you know what the great opportunity which we're going to talk to later in today's conversation is? We can now fill in those long equations full of variables with more constants. So we can turn it to your point, your both of yalls point. From a just a cost center to a revenue producer. Okay, I gotta tell, I gotta tell myself, unlike my significant other, I hate returning anything. So I'm probably the oddball in the global especially e commerce world. But is there any way, Chuck, to reverse this trend of what some would call entitlement for consumers when it comes to return policies and returns themselves?

A (19:13)

Yeah, unfortunately this is like a mattress in a box.

B (19:19)

Because once you let.

A (19:20)

It out, it's hard to get it back in if you go in. If you look at like Asia or Japan, Japan runs a 1% return rate because it's culture issue. We've allowed it. You know, if you look at the surveys out there, anywhere from 70, 80% of consumers say I will shop a retailer based on free returns, easel returns. So now does that mean retailers don't change? They're changing, but it's like what I call boiling the frog. You can't do major impact of things in the return space but you can see it where they change return time frame. Or if you're like with Amazon, if you don't return a year, I'll charge you a dollar. Some customers are doing restock fees for non negligent items. So you'll see some of those sales. But because the consumer has spoken and said I'm, you know, everybody's out there for market share, they said hey, the returns experience has got to be good or I'll just go to somebody else.

B (20:24)

Right?

A (20:25)

And nobody in the industry, they're not, there's not this unilateral group that says hey, let's all, let's all be restrictive on returns. There's nobody out there saying that because they're competing for market share and they don't want to be that first one to draw the line.

C (20:40)

You know what category of products has the lowest amount of return? Gardening tools, apparently gardening tools. And any purchases that are made intentionally, I was expecting, I like jewelry, I like to wear pretty things. And I was expecting that jewelry was also a low category. But jewelry has the highest return on for ring sizes. So every commodity is. That's another challenge right in the industry that you have a uneven marketplace. And if the customer is intentional about their purchase, the likelihood of that return diminishes rapidly. That's why large bulky items are very difficult. But in terms of household and consumer products, gardening tools, apparently gardeners are doing the right thing by picking just the right tool. They need that day and doing their homework.

B (21:39)

I love that. Claudia. So all the gardeners out there, thank y' all for being great stewards in this journey we're on. I want to talk about Chuck, since we've got a legendary figure here in your. In over the 20 years, let's call it last 20 years, what has been one of the most significant changes in returns management, would you say?

A (22:00)

Well, the first that comes to mind is the, you know, since Amazon substantially launched in 1999, the growth of E Commerce has probably been the most significant impact to the reverse space that people have had to adjust to, to, you know, from a financial standpoint, from a supply chain standpoint. But the other is, is that, you know, and, and I know they probably talk about AI, but the ability to manage data on a much better, from a much better perspective with business intelligence tools has really helped the industry forecast returns and do some things to hopefully mitigate some of the returns as they collect data from the customers and say, hey, why did you, you know, why did you return it, Chuck?

B (22:51)

That's a great call out. And Claudia, we talked a lot, a good bit when we were all together in Dallas at our early event about returns planning that can, it's, man, it's amazing some of the planning activities that are going on and innovation there, technology and otherwise. As Chuck was sharing some of those big changes over the last 20 years. What'd you hear there, Claudia?

C (23:09)

Some things have stayed the same and some things are rapidly changing. So the things that have stayed the same in our world, we run our business and reach students by giving scholarships from inventory donations. One thing that has remained the same is that by and large corporations continue to have a community heart. Companies still want to do the right thing. And with that you have the umbrella of corporate social responsibility. So some motivations and commitments to the community are steadfast. And every large entrepreneur understands that that is how you get far in in the world of business by having the opportunity to do good. And I know that that is true for Return Pro. It's good for supply chain now and certainly here at eal, what is changing rapidly. We also had yellow pads and pencils and faxes. So the speed with which the technology has come at us keeps you on your toes.

B (24:14)

It does. It sure does. And it can keep you close with the customer.

A (24:19)

Right.

B (24:19)

And put you in a great position to optimize their experience forward or reverse. Great.

A (24:24)

One thing I would, I just would add, but Claudia brought to mind is, you know, in the current age where ESG Reporting is so important. I'd always said, you know, that the returns network was, you know, was far ahead of the, the environmental sustainability. And we talk about circularity sustainability, but returns has always been that. It's always been, let's figure out how we get it. And then anybody who's managing returns is always, to Claudia's point, you've got to look at the nonprofit areas as an outlet for that product liquidation. Back to the manufacturers partnering to make sure that at a minimum, there's a very little going to waste.

B (25:07)

Yes, that's right. And that's a tremendous opportunity as well, that we're seeing some great innovation from a proactive standpoint, with more circularity being baked into product design and whatnot. And from a reactive perspective, we might touch on some of this in a second. All right, let's do this really quick, Chuck. Despite all the gains we've made, what is one of the biggest challenges from a return standpoint that just it continues to persist?

A (25:34)

What comes to mind right now, probably the biggest challenge in the reverse is that, you know, returns is there. I mean, you're going to manage it through the partnership with the collaborative approach with manufacturers and retailers. What you're finding out is a lot more has got to go to the secondary market. And the secondary market, and I've always said in, in all these conferences that, hey, there's so much opportunity for people to create a business, to be an outlet for this product. My concern right now is that the volume of product is outweighing, is outpacing the outlets. If you look at some of the recent changes where companies like Bargain Hunt or CCM in the US have gone bankrupt, so that that outlet has not, you know, but it's created to back you. And so there's a lot. There's people like Bin Stores and others that are creating out there that create just tremendous opportunities for those next entrepreneurs to come up with is how do you help manufacturers and retailers managing this process?

B (26:43)

Yes, it's good stuff there, Chuck. The, the RE economy, which is kind of the secondary market, plays in. That's been one of the cool things to see. Seems like the appetite from your average consumer to use remade, remanufactured resold stuff. It's been growing and growing, but to Chuck's point, so have been the providers. And there's an equilibrium we've got to arrive at as an industry.

C (27:04)

Claudia, your quick comment there would agree as well. And there's another sort of blind spot in terms of this imbalance. There's an entire backlash in some industries about insurance, three PLs holding on to products and stuff that sits in warehouses, you know, 10 trailer loads of a particular commodity. So is an abundant marketplace. You just have to know where to look and then know what value you can add to that solution.

B (27:35)

That's right. That is right. Good stuff. Claudia and Chuck, let's talk more about innovation. Right. We've, we've kind of wallowed a bit into some of the challenges and that we're not done yet. But I want to talk about some of the innovation because whether you find that at Return Pro, from that great facilities tour, you and I took Claudia to many, many other places, we have so many new players that are driving innovation and a lot of them are bringing technology more and more technology. So Chuck, how do you see technology improving the cost impact of returns now and into the future?

A (28:05)

I think the biggest impact, and again, speaking from a Return Pro standpoint, is that the ability to create an algorithm that can look all the way at the consumer first decision point to do a return as to where the best path for this needs to be. You know, you can look at it and say, hey, it's an rtv. We can return to vendor. It goes this way. But particularly since more and more is is be going to the secondary market, intelligent algorithms that can make that decision at the point of the consumer initiating return. That's why you're seeing a lot more people doing to keep it, because they have algorithms out there that act as like an ERP that take all the elements of cost and say, look, this is just a loss leader to even send it back, but then they're using the data to manage it. So again, as you talk about fraud is to make sure you start qualifying returners. So if you're a habitual returner that you can track that and you can do some things through your algorithms, through your customer service to better manage that process.

B (29:18)

Yep. Man, we could spend a whole hour, I think, on that last response there. But Claudia, your thoughts?

C (29:25)

I would agree with Chuck. In terms of the role of technologies, particularly what we are doing here at eal, there are two things in our space because remember, charitable donations are maybe one stop before the landfill. So we are dealing with the return of the return. So quite imperfect product. There are two things that we need. What isn't and what condition is it in. So we are now partnering with Oracle, speaking of tremendous partners, and at eal, we are piloting the use of what is called Model Context Protocol, mcps. That's kind of an agent. It's an AI technology that by using computer visual with taking a photo, it checks that item. It tells us what it is. It tells me whether or not we have it in inventory and what condition I have it and whether I have room enough on that bin to put that item. So we are piloting that AI solution here at eal.

B (30:24)

Outstanding.

A (30:25)

Well Claudia, and the other thing is a lot. It's amazing how many people don't understand when you look at the charity side non profit right there is from a government standpoint there is an extended tax credit that companies can benefit in the process of donation. I would tell you there's not many companies that have that factored in their algorithm that says hey, this is a path that you as a, as a retailer or a manufacturer can take advantage of.

B (30:54)

So folks, if you want to learn more about any of that stuff, an opportunity to reach out to Claudia or Chuck I bet but either one of them could could educate you there because it's a great opportunity. I want to pick back up on what Claudia mentioned about AI though. So Chuck, I've been calling this the golden age of supply chain tech because in my in my belief it is right now maybe the greater golden golden age may be next year or something. Who knows. It is amazing what we're seeing modern technology doing, including AI. However, at the same time an interesting paradox, we see consternation and frustration with teams where maybe the leadership said oh I need to be doing something with AI too and throw it on the fence with no business case, no direction. So we're seeing both. But how are you seeing the AI artificial intelligence impact the return space?

A (31:44)

Well, the first thing is for practitioners like ourselves with things like chatgpt Kamma lovable, the ability to take a concept, convert it and create a software solution has significantly reduced the time involved with that. Now in the conference we had in Dallas, when you talk to the retailers we talked about earlier is that not a lot of them are using AI. I think third parties are using AI significantly because it helps reduce their cost the time to develop software solutions. But AI in terms of managing fraud with the ability to image recognition and do some things in terms of calculating the value prop for moving stuff, AI is really going to help in that and streamline that part of the return process in my opinion.

B (32:44)

Yeah, no doubt. And I think either you said it or someone else said it here in a conversation I had in recent weeks. Hey, do what you do best, right? If you're a world class three point shooter, stick to shooting three pointers and let Other folks crash the boards or what have you. And the analogy there is, you know, if you are the world's best retailer, hey, stick to doing that and delighting your customers there and bring in experts to do other things with innovative technologies. Claudia, your quick comment before I keep moving.

C (33:14)

Three things. When you are considering AI to adjust Chuck's point. And don't just think about it as one more thing that everyone is doing. Make sure that you know three things. Number one, what problem are you trying to solve? Pick the right tool, whether it's machine learning, language model, mcp, an agent, pick your tool and also make sure your data infrastructure can handle AI.

B (33:42)

Yeah, excellent advice. Data, data, data. That's the new oil, as they say. All right, really quick. Speaking of technology, I want to. If you all like this conversation this far, I want to invite you to one of our next conversations. Because our next edition of our monthly leadership series called the Bridge, well, we're welcoming in the one and only Deborah Dole, who's doing some really big things in the industry and in tech and in circularity. Deborah's going to be sharing critical ways that we can all optimize our ability to, to drive digital transformation. So come join us on October 21st, and we're going to be dropping a link. Chuck and Claudia, I had a really interesting sit down with the one and only Rich Bulger. Y' all probably both are familiar with him. Author of Going Circular. So, folks, go check out this book.

C (34:27)

Right where you show and tell.

B (34:29)

Oh, you've got your master class, Peter. Delivered. Okay.

A (34:34)

Wow.

C (34:34)

Very highly recommended.

B (34:37)

Definitely. So Rich made what some might call a counterintuitive argument in our little chat. We're gonna actually, we're gonna be publishing this soon as part of a podcast that we need more returns, not less, more returns. So, Chuck, when the returns process can be baked into a true circular supply chain, it can not only delight customers, as we've been talking about, but it can be a revenue generator, is what Rich was sharing your thoughts.

A (35:04)

Well, I love Rich, but I would probably have to disagree with him on this point. And from the perspective is that in the reality, you don't make money in returns, you mitigate you. You mitigate loss. At the end of the day, I mean, transportation companies are making money. That's, you know, fine. But as a retailer, as a manufacturer, you're not. Practitioners are, because that's the only way you stay in business. I think what where Rich is speaking from a circularity standpoint is that if you look at it and say, hey, On a blended basis, returns are 16.9%. That means that there's 80, you know, whatever that is, 83.1% that doesn't come back that consumers are not bound by the same restrictions that retailer manufacturers are. And there, there's a disposal effort on that 86% that is not controlled. So to Rich's point, from a circularity standpoint, the more of that, you could get back into the returns process stream where people understand the process and are managing it effectively. I would agree. More returns is. Is not on the playbook of any retailer or manufacturer that I'm aware of.

B (36:23)

Well, you know, it could be. It could be me, the carrier losing things in translation. But we'll have Chuck and Rich and Claudia join us for a show coming up. And before I get Claudia's take on this, folks, you got to go check out all things circular. Great podcast at Rich and Damien and Vic and the team are leading. So go check that out. Claudia, your thoughts? More returns, less returns. I can see, especially in, you know, Rich has done this in the smartphone space. Right. And some industries maybe may really be in a better position where more returns can maybe produce revenue. I don't know. Claudia, your thoughts?

C (37:00)

Well, there is an interesting dialogue about more or less returns from whichever point you look at it. Right. But if we look at what is happening in Europe regarding policy and the fact that there is an introduction of the Circular Economy Act, I wrote it down so I will get it correctly. The Circular economy act in 2026 is coming up and as we know, many European businesses are subject to highly more progressive, if you will, regulatory positions. And in that particular scenario, they want more returns, as Chuck said, because Europe is looking for things like raw materials. Europe is looking to reduce the number of landfills. So in that sense, if we keep an eye on what is happening at the regulatory or policy level, we will see that there will be an alignment with what the Rich is anticipating. So something for us to consider.

A (37:58)

A lot of companies, Claudia, offer take back on particular products like your cell phone companies offer take back to get those back into commerce for the purpose of extracting the ilium, the. The value prop. But nobody wants more canoes.

C (38:17)

Unless. Unless you are here. Yeah, we want them.

B (38:20)

There we go. There we go. We'll talk. We'll touch on that in a second. Chuck, I tell you, you are the master of using analogies. I'm still. I wrote down, Claudia, the mattress in a box, that image that is such a great. We've all may have gotten a matrix delivered to Us in a box. And you're right, once that thing is out, it ain't going back in. So I'm gonna have to steal that one from you.

C (38:41)

Right? Right.

B (38:42)

All right, so we've been talking a lot again, folks. Y' all should go. If you love the reverse space. If you love return space, y' all really go check out rla.org which is now part of the NRF family. You won't find a better repository of reverse and, and returns management leadership. So check out rla.org so when we were at Chuck and Claudia at the very recent RLA private leadership conference in Dallas, great time last month, terrific gathering, ton of reverse leaders in the room. One of the dominant themes, Chuck and Claudia, and it was inescapable was returns fraud. It's growing, it's getting more complex. Bad actors are doing innovative things. Unfortunately, I wish they'd turn their attention to doing good things, but it is what it is. Chuck, how do you see retailers and manufacturers impacting this growing and more challenging problem?

A (39:33)

Well, you know, to your point, as we had, we had the conversation, Dallas, current NRF Data is that $103 billion is how what they encapsulate as fraudulent returns. Now that's made up of, you know, retail theft, which is, you know, it's tough. One of the stats that I read, I was, you know, sharing is that 40% of consumers have admitted that they do a fraudulent return. That, you know, that speaks to some other things. But yes, that we probably need to fix as a, as a country, but into what. What you're seeing is a lot of companies are doing a lot of more, a lot more stuff with data is that they're looking at returns, you know, from the standpoint of who are the habitual returns. They start categorizing, you know, those returners. And in terms of who, who is, you know, if you go to like Walmart, if you do a non receipted return, I think currently you can only do three in 12 months. That limits some of that. But then, then you get like when I was at Depot, we had similar, you know, where you had unreleased, we'll give you, you know, a gift card or whatever it is. But we tracked those. But what was, what we found was happening is that, you know, the, there's a lot of day laborers outside Home Depot. People are giving them each one one each and having them go and return it. So I mean, a lot of these folks are smarter than people are willing to put the time and systems in to charge a truck will AI Help. Yeah, absolutely. Being able to do more at the return point with imaging and, and try to, but it still doesn't, if you want to have a fragile return, doesn't necessarily mean the thing I took a picture of is the thing I put in the box. Right. It's still always, always concerned. So more data management, more AI tools, more again, tools to try to mitigate that. And you know, some things are, you know, not to get political, but if you're in a state that allows $900,000 in theft before you prosecute, you know, you know, somehow you got to change some of that, that thought process to, to mitigate, you know, the, the crime syndicates too.

B (41:54)

Right. Well, I got to go back, Claudia, to one of the first things Chuck shared that 40% of consumers admit to, you know, fraudulent returns. That is such a surprising, you know, surprising figure. But your thoughts, Claudia, would you hear.

C (42:10)

There from Chuck, what I found fascinating as well from our leadership summit in Dallas is that the use of data analytics to not only study the mechanics of the return, you know, where are they returning the sort of value of the item or the condition. But what I found fascinating, Chuck, was the comment about analyzing the consumer behavior. If you had a frequent returner, if you are frequently returning to a pattern of stores that reveals that you really are engaging in fraud. Now retailers have access to more data about what type of refund fund they give you. Are they going to give you an instant refund or are they going to give you a refund in 30 days? Are they going to give you a coupon? And that is where some of the behavioral aspect, because we can't talk about the ethics in the consumer world, but we can enforce more positive behavior. I would say yes.

B (43:16)

Yeah, we're going to have to is is my prediction because I'll tell you there. But at the same time, the consumer is going to do what we allow them to do. It's kind of, you know, one of the points that we're making here.

A (43:29)

So the other thing, Scott, I would add is there's, you know, speaking of our friend Rich, he was out in Europe and he visited a company, Breezy, that does is doing digital id. You know, in the industry, there's always been companies like Income that have done serial number reporting. There's always been this push for rfid. There's a lot of things that you can do in that in from a technology standpoint to track it at the point of sale, to manage it at the point of return. So you can limit some of this so that if it is retail theft and you didn't go through the pos, you can track that and identify the point of return.

B (44:08)

Yes, that's right. It's amazing the technology. We're seeing more and more in the reverse space. And by the way, quick shout out to our friends at Clarity, which is a cool startup that Claudia, Chuck and I and all the tour attendees saw some of their technology in action, which was really, and I could have my, my wires crossed, but was really focused on attacking the fraud that comes in many original manufacturer packaging way upstream. Is that right, Chuck?

A (44:35)

Yeah, it can do, you know, once you build that template into that, that system. And again, another, you know, if you talk about industry pioneers, what Senator Shamas is, is doing, and he's look, you know, working with Andy Rubin and others in the industry to say this is a solution that can help with what is today $103 billion issue.

B (45:01)

We're gonna keep our finger on the pulse. I gotta keep up. I'll tell you. This is a fast moving space. I'm so glad I've got Chuck and Claudia here to help it make sense to slow people like myself. But a big thing is coming in the returns in reverse space. Hey, really quick, folks. Amazon reshape 2025 is a great conference coming up in November out in Seattle. I'll be there on the boots on ground, interviewing movers and shakers like Chuck and Claudia. Come join us and we're going to drop a link so you can do just that. Okay, let's see here. I wish we had a couple more hours with y' all both. I'm having such a great time. I feel like I'm earning a degree in all things reverse here with these two titans. Chuck, as we start to wind down though, I want to ask you this. I got two, two more questions for you. Then we're going to make sure we touch on Return Pro and EAL Green. Chuck, why aren't more, why aren't we seeing more retail investment in the return space?

A (45:56)

The challenge has always been, and again, I was blessed with companies that were really focused on it, but even for companies that are focused on it, when they have to go in. And part of the challenge you face is that in the retail industry, buyers are evaluated on the initial margin, not maintained margin. Returns impact the maintained margin side of it. The challenge is to have someone who's an ambassador for this in the company. You know, like Tony had asked, how many VPs are there is somebody who's got a seat at the table that can articulate what are the costs? What is it impacting? Is it, you know, initial margin is fine, but what is maintained margin because that's what goes to the bottom line is how is it impacting us? Be able to put together a return on investment that you can then promote within the company to make sure that you can get, if you have a seat to take when you can get allocated dollars to improve the process. That's always been the challenge for a lot of companies.

B (46:59)

So whether it's Chuck or Rich or Tony or we heard Gartner analysts talking about this symposium. We need to Chuck's point. We need to see more ambassadors and formal education and visibility so that we will see some more investments we need to make. I would argue not sure if you all agree with me. We need to create, you know, we've seen an explosion of supply chain management programs. I think we're over like 250 now. Just North America in the last 25 years or so. That's a wonderful thing. And as I go out and meet students, I already know what supply chain is. I mean they're years ahead of where we were, you know, decades ago. We got to see the same evolution take place from reverse logistics and returns management space. I would argue, Claudia, ambassadors, more formal education, some more designated leadership so we all of that and a lot more so we can get to more investment dollars in this growing challenge. Your thoughts, Claudia?

C (47:57)

When I talk to Rich at the summit and Peter Evans as well, we discussed the need for, for having board of directors as well become aware. So when you have a corporation where the governance is aware of what is going on and for those of us in my generation, our generation, as we think about transferring knowledge and technology and know how, is also transferring that desire to advocate to be that ambassador. We've always called them an insight champion like we have in this community, those in this room and those outside the room supporting each other, speaking about the benefits of having a solution, avoiding waste, understanding that the reverse logistics market. Talk about, we didn't even touch about platforms that are emerging. So software entrepreneurs are really getting into putting together a marketplace which just makes this a solution that it's more accessible to everyone who needs it.

B (49:03)

Yes.

A (49:03)

And I would tell you, Scott, it's good to see we're seeing programs, major supply chain programs, Michigan State, Penn State University, Arkansas, wherever it is, East Carolina, all with curriculum, not degrees, but curriculum that is focused on return space. I haven't seen that in the past. That's good because the next generation of people are going to now See it and what we should start mentoring people on that to get into this industry, to really drive it.

B (49:33)

Yes. We got a bright future. I'm really excited about where we're going and it's really needed. We got to keep innovating and bringing more people into the reverse side of things. Chuck, if beyond reading Rich Rich's Rich Bulger's book going circular the Evolution of Reverse Logistics into a competitive weapon. So beyond reading that.

A (49:56)

Yeah.

B (49:57)

There's other companies and, and organizations and leaders out there that want to get involved. They want to find a way to incorporate and find some revenue and, and help solve problems in the reverse logistics and returns management space. What would be your advice there, Chuck?

A (50:10)

There's a lot of really good practitioners in the third party space. Now speaking for Return Sprout, we have an extensive background in knowledge and history and returns. There's companies like us that you reach out to to find a solution in terms of what your needs are. And there's a lot of offerings. It may not be the whole gamut, it may be a section of that. But the other side is more and more. You know, there's the NRF is now taking on the mantle of what was rla. That gives it a lot more a larger voice. Just encourage folks that, you know, if you're a retailer, you're attending nrs, get over the NRF R V to understand more about the space. What can the space do? Who are the people out there that are practitioners of it, that can help you and just reach out?

B (51:01)

Love that. Get educated folks. This is not the returns in reverse space that it was in 2000. Even 2015 is changing, moving, innovating fast. Let me ask you this Chuck. You mentioned Return Pro and you mentioned a little bit about what the organization does. How can folks connect with you and the Return Pro team?

A (51:20)

Well one, you can go out to the Return Pro website and that will, you can request a demo if you know, if you want to reach out direct. See Johnston all low case returnbreil.com reach out. I mean I'm more than happy and one of the things I, you know, in my 20 years plus of this is the ability, the blessing I've had to be able to mentor people in the industry to advise people in the industry. Not from a self serving standpoint but just help educate. Because the more we educate, the better.

B (51:53)

The industry is going to be outstanding. I got one more thing before we shift gears and get Claudia to tell us about Yale Green. Chuck brought resources folks and we love sharing resources. We're gonna be dropping this link there. The Return Pro team surveyed over 500 retail leaders to uncover the expectations and the strategies shaping holiday season 2025. You can download your free copy of the returns report 2025 holiday edition right there. In fact, we've got the research there from Return Pro. We've got the Amazon Business Reshape 2025 event. Come join us in Seattle. And then we've got all the way back to Deborah do and that upcoming edition of the Bridge. You don't want to miss that either. One click away. Okay, Claudia, we learned about Chuck and Return Pro and and a great resource he is. Let's talk about your great work at EAL Green, which you've been leading for a long time, ever since you and I first met and way before that. How can folks connect with you and support your mission there?

C (52:55)

The best way to reach to me personally is on LinkedIn. Just drop me a line or as Chuck was gracious and generous to share. You can find me@claudia.org, you can also visit our website. And if you're looking for a partner that can enhance the value proposition, whether it's getting some more brownie points on your ESG with your social impact or with regards to environmental diversion from the landfill, we make it easy. It doesn't cost you any money. We manage transportation. We are very, very happy to count on Sendar's vision and his team with Chuck and Mike and the rest of them in terms of sharing with us resources because what we do is that we either reuse it on a college campus to to fund a scholarship, we will repair it or resell it or we will recycle. And all the revenue goes to fund EAL because we are self funded. We do not get any funding from any other source and create scholarships. I was just looking at my statistics. While on our way to achieve our goal of 1000 students this year, we are as of today 739 college students receiving EAL scholarship scholarships from returns. So we make imperfect inventory to have social impact. And we are so thrilled to be here with you.

B (54:22)

Love that Claudia. And you're top ranked. I just know I was on your site earlier today which doesn't surprise me but I think you know, in the world and the tidal wave of nonprofits, you should know who you're dealing with and it should be a trusted organization. And let's see. Platinum Transparency 2025 from candidates top rated non profit according to Great Non profits and Charity Navigator which I think is Cadillac Rate your organization a Four star non profit. That is outstanding. Claudia Freed. Thank you with EAL Green and folks, you can learn more at E L E A L. Don't get me wrong. E a l green.org Chuck and Claudia, this has been an outstanding conversation. I got one more question though for Claudia. Claudia, Chuck shared a ton of brilliance here today. What was one of your favorite takeaways from today's conversation?

C (55:14)

The entrepreneur spirit in this space. I think that when we think about opportunity, it's not winner takes all. When you are able to see a problem through the lens of its journey, how did the problem start? What are the complications in the middle? And how can you be part of the solution? Chuck highlighted an arc of experience which I would invite anybody to go and revisit not only this podcast, but previous ones. There's a wealth of information and it's just his generous spirit sharing with us. And I hope that you get a lot of mentees because people can learn a lot.

A (55:55)

In closing, I appreciate you again bringing this, this topic to light through your program. The other side is that this is 30 plus years old industry. There's never any better opportunity to get into it now because as you stated, it's approaching a trillion dollars. There's nobody in our industry that has more than 1% market share.

B (56:19)

Wow.

A (56:20)

Room at the table for everybody. All ideas are welcome. There's a lot of innovation to be had.

B (56:25)

Outstanding. We're going to have both of y' all back as we continue and we've been trying to shine a light on this for a long time. Thanks to our friends at Tony Sirota and, and Claudia, you were an early connection in our efforts there in Vegas. Way back when we were knocking out like 25 interviews a day and I wrapped up by, I couldn't even say my, my own name right as we wrapped up those long days back in the day. But anyway, and Chuck, really appreciate your golden ambassadorship. We need more leaders like both of y'. All. But certainly Chuck, appreciate your hall of fame career and you're just getting started, I bet in so many different ways. Appreciate what you're doing at Return Pro. So we start to wrap Chuck Johnson, Chief Strategy Officer at Return Pro.

A (57:05)

Folks.

B (57:06)

You can learn more@returnpro.com Chuck, thanks for being here.

A (57:09)

Appreciate it. Claudia grows pleasure seeing you.

C (57:13)

Thank you. Likewise.

B (57:14)

Claudia Freed, CEO at EAL Green. You can learn more@e green.org Claudia, always a pleasure.

C (57:22)

Thank you. Thank you Scott and the whole team of supply chain now, thank you so much.

B (57:26)

Appreciate y' all being here. So folks, you got homework. Hope you enjoy the conversation as much as I have. But the onus is on you to take one thing from today's conversation. Chuck and Claudia shared a truckload, a couple containers, loads. Maybe take one thing put into practice, right. Deeds, not words. That's how we're going to keep transforming global industry, not leave anyone behind. So on behalf the whole team here, Scott Luden, challenging all of you, do good, get forward, be the change that's needed. And we'll see next time right back here at Supply Chain Now. Thanks for.

C (57:55)

Bye.

A (57:57)

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B (57:59)

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A (58:04)

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B (58:06)

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