January 8, 2019 5:15 PM, EST

Retailers Turn to Logistics Providers to Help Manage Returns Process

Returns ProcessThe return counter at a Target store. (Jeff Zelevansky/Bloomberg News)

For online retailers, one of the challenges with the reverse logistics process is knowing what to do once items are returned. Some products could be returned to a finished goods warehouse whereas defective ones could go to a location to refurbish or recycle the product.

RELATED: Logistics companies aim to ease returns, keep costs low amid e-commerce rise

“Retailers have not figured out how to balance that yet,” said Tony Sciarrotta, executive director of the Reverse Logistics Association.

Retailers are turning to their logistics providers to help them manage the process, which includes not only moving the box, but also the testing, repairing, restocking or disposing of goods, said Andy Moses, senior vice president of global products for Penske Logistics.

Processes can differ for each shipper.

“We have 35 different clients. That is 35 different scenarios,” said Ryan Martin, president of distribution services for ITS Logistics. “Some want all products to go back into stock. Some don’t want anything to go back into stock.”

One of ITS’ customers, which manufactures stand-up desks, has the logistics provider destroy and dispose of damaged products.

“You need a robust system to tell the employees what to do. You don’t want the employees to make the decisions. You want the system to,” Martin said.

Ryder Supply Chain Solutions sorts and segments products based on guidelines from its customers.

For one client, the company completes a visual inspection of returned items followed by a fairly detailed electronics test, said Alec Hicks, group director for supply chain excellence at Ryder.

Those products may be scrapped, refurbished and resold in a secondary market, or placed back into the warehouse.

Some retail outlets prefer shoppers to return purchases to the brick-and-mortar location.

“It is eyeballs in the store and you might buy something new,” Sciarrotta said. “They’ll ask you, ‘Did you get the wrong thing? Can we help you get the right thing? Is there something we can do?’ ”

UPS has partnered with Optoro, a returns optimization platform, to help maximize recovery value and reduce waste. Optoro’s technology determines the highest value channel for returns, which can include returning it to stock, refurbishing or donating it, Optoro said.