Surpassing Survival this Post-Holiday Return Season

The holiday season continues to be  a big deal to both suppliers and retailers. During these months, products fly off shelves, special sales demand massive quantities of items, and consumers hit the brick-and-mortar floors just as hard as they flood through e-commerce channels. But once the new year begins, the stress remains on retailer and manufacturer shoulders.

The post-holiday return season is demanding for both retailers and suppliers, as once eager customers return merchandise and tech-savvy individuals sell back old products and electronics. Merchants are putting in immense effort again this year, especially in an era when the consumer is king.

High stakes
According to eMarketer, which cited a LoyaltyOne report, about 61 percent of survey respondents said they would never return to a retailer if the gift return experience is poor, while almost 87 percent indicated that they would retell that story to their friends and family. Additionally, the source noted that close to 80 percent stated that they would be motivated to return to a store if they had a good experience returning unwanted or broken products.

On top of those statistics, retail returns are estimated to exceed $68 billion this year. The Las Vegas Business Press reported that retailers are eager to recover all of their lost profit during the year. This can lead to a lot of pressure on merchants in early 2015. They need to optimize return strategies on the customer side of the coin, but they will also be required to manage systems that run behind the curtain.

Finding a solution
Retailers are going to need to adopt new strategies in order to recoup the losses expected from product returns. In fact, Rachel Russell, Vice President of Marketing and Business Development at Liquidity Services, explained  in the article that too many merchants are inexperienced when it comes to the second market. This is going to impact their yearly revenues, as well as prevent them from remaining competitive, especially if the competition is using reverse supply chain strategies.

Managing overstock and returns can be burdensome without help from a trusted asset management partner.
Managing overstock and returns can be burdensome without help from a trusted asset management partner.

To capitalize on the return season opportunities, many retailers are forming partnerships with trusted asset management organizations in order to ensure a return on their investments. Return-to-vendor contracts can be evaluated, but many merchants will also have to turn to selling open, already used products on secondary markets. Alternatively, asset management partners take in overstock merchandise, ensuring that retailers earn as much revenue on their surplus as possible while clearing their shelves for Spring.

“Surplus product – through overstock, returned and refurbished goods – takes up valuable warehouse and store space and employee time to manage, and many returned and refurbished products cannot be resold on store shelves,” Russell told the Las Vegas Business Press.

Retailers will want to start managing their overstock and returned products as soon as possible. The longer these items sit in stock rooms, the more revenue will be lost. Fortunately, the reverse supply chain and secondary markets provide merchants with a great outlet for surplus merchandise. However, the key to success lies in partnerships with asset management organizations with industry experience.