TECH BUYER Mar 2020 - IDC PlanScape - Doc # US46093119

IDC PlanScape: Digital Transformation for Returns Management and Reverse Logistics

By: Jordan K. SpeerResearch Manager, Global Supply Chain

Abstract

This IDC study addresses the exploding growth in ecommerce, the rise in returns that has come along with that growth, and the cost of those returns on customer experience, profitability, and sustainability.

Returns are a $400 billion problem at retail and growing rapidly in line with continued expansion in ecommerce. U.S. online sales were just 5.8% of total retail sales in 2013; they had grown to 11.1% by last year and are projected to be 13.7% of total U.S. retail sales by 2021.

More online shopping necessitates more individual package deliveries, and that leads to more returns, in store and online. While returns have historically been regarded as just a "cost of doing business," growth in ecommerce and the higher levels of returns it generates, combined with the potential for customer dissatisfaction, are driving retailers to evaluate returns as not just a line item on the balance sheet but as a process area that deserves significant attention and reengineering. Better practices when it comes to returns management and reverse logistics are crucial for profitability but also open the door for competitive differentiation. The road to successful returns management and reverse logistics travels along a path of digital transformation.

"While many costs are subtracted in moving from the top line to the bottom line, including labor, taxes, amortization, and the like, there's also another line to consider that doesn't show up on a balance sheet but is equally important," said Jordan K. Speer, research manager, Global Supply Chain. "Think of it as a sideline, one that extends from top to bottom and is also the vantage point from where your customer sits, watching. The sideline comprises the effects of returns on your customer, and thus to the cachet of your brand."


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