We examine how five startups are using different technologies and strategies to help retailers cut down on costs associated with product returns.
Returns are causing a headache for retailers. The National Retail Federation (NRF) estimates that US retailers lost $351B in 2017 due to returns alone.
Online retail is particularly vulnerable. For example, while e-commerce retailer Revolve pulled in close to $400M in sales in 2017, it had to pay back a similar amount in returns that year ($390M).
Beyond lost revenue, returns are expensive to process. Each time an item is returned, retailers often pay for its return-shipping, re-sorting, and re-shelving. This process is known as “reverse logistics.” For this reason, high volumes of returns can impact a retailer’s profitability.
To help retailers reduce return-related costs, startups are using new strategies to streamline the reverse logistics process. Some of these include in-person return kiosks for online retailers, artificial intelligence (AI) software that sorts returned inventory, and virtual reality (VR) showrooms that help reduce customer return rates.
We examine these startups, and their strategies to reduce returns, below.