Above the Fold: Supply Chain Logistics News (October 27, 2023)

By Adrian Gonzalez

It’s one of those Fridays, where I’m short on sleep, short on time, and have lots to do before the day is over.

So, without delay, here’s the supply chain and logistics news that caught my attention this week:

Happy (But Hopefully Fewer) Returns

With the holidays approaching, this is the time of year when e-commerce shipments ramp up significantly. Then in January, we’ll see a ramp up in returns, which as I wrote back in January 2018, is the “hangover headache of e-commerce” for retailers.

But behind every problem, there’s an opportunity. And retailers have been taking action to see if they can reduce the volume of returns.

On the opportunity side, there’s UPS’s announcement that it is acquiring Happy Returns from Paypal, “a U.S.-based software and reverse logistics company that enables frictionless, no-box, no-label returns for merchants and consumers.” Here’s what UPS CEO Carol B. Tomé said in the press release:

“We know that returns have long frustrated shoppers and retailers looking for quick and easy solutions. By combining Happy Returns’ easy digital experience and established drop-off points with UPS’s small package network and footprint of close to 5,200 The UPS Store locations, box-free, label-free returns will soon be available at more than 12,000 convenient locations in the U.S.”

As everybody in logistics knows, there is no such thing as “free shipping” — and there is also no such thing as “free returns.” Back in April, The Information and USA Today reported that “[Amazon] customers living near a free drop-off location who decide to return their package through UPS may have to pay a $1 fee.” As I wrote at the time:

$1 isn’t really a lot, and it won’t surprise me if the fee goes up in the future, but the goal is to encourage customers to bring their returns to Whole Foods, Amazon Fresh, and Kohl’s locations, which presumably enables Amazon to process returns more cost effectively by using its own assets and creating greater density and economies of scale.

Even better, Amazon is trying to prevent returns at the front end of the buying process. As reported earlier, Amazon also recently “introduced the badge [on product listings] with the words ‘frequently returned item,’ which urges shoppers to check the product details and customer reviews on items that have significantly higher return rates in their product category.”

In the Wall Street Journal this week, Liz Young reports that “New fees for online consumers to send back goods appear to be cutting back on returns as retailers had hoped, but they could also be costing companies customers heading into the holiday season.” Here’s an excerpt from the article:

Happy Returns said its survey found 81% of retailers implemented some form of return fee within the past year, including for mailing items back and for home pickup…About a third of companies surveyed say they have lost customers since they began charging consumers fees to return items that they purchased online. That suggests merchants are seeing a backlash even as more than half of them say the tactic has slowed the flood of goods they have seen coming back into their warehouses over the past three years.

As I wrote in April, retailers created this mess by overfeeding us with free shipping and returns; now that we’re fat and happy with it, they have to find ways to wean us off it.

For related commentary on returns, please read “How an RMS Helps Optimize E-commerce Returns Management” and “Product Returns: Another Moment of Truth.”

And with that, have a happy weekend!

Song of the Week: “loneliness for love” by lovelytheband