Transcripts
Welcome everybody back to Unboxing Logistics.
Speaker:So excited to have you here today.
Speaker:I am really excited.
Speaker:This time of year, we all know, returns is the name of the game.
Speaker:We have just had peak season.
Speaker:It's wrapped up hopefully well for all of you.
Speaker:And so I thought, what a great time for us to be talking returns.
Speaker:And so I brought in one of the greatest experts on this topic, Amena Ali from Optoro.
Speaker:Amena, can you introduce yourself, kind of tell our community a little bit about you?
Speaker:Hi, Lori.
Speaker:Thank you so much for having me on, and happy New Year to you.
Speaker:I'm the CEO of Optoro, and we live, sleep and breathe everything returns and reverse logistics.
Speaker:So we're talking about retail returns, whether from online, made to third party locations.
Speaker:Made into omnichannel back in the store and how all that product gets ingested
Speaker:back into the supply chain and back out.
Speaker:How that impacts customers, shoppers out there who are returning things.
Speaker:Everything returns is what we do.
Speaker:I love it.
Speaker:And it is such a fascinating kind of facet of our industry.
Speaker:It is, it can make or break a lot of companies.
Speaker:So I'm really excited for our community to be able to learn from you today,
Speaker:kind of hear about what trends we saw in 2024, what you're expecting in 2025.
Speaker:But before we do that, there's a couple of things that I've got going.
Speaker:First I want to get to know you a little bit better.
Speaker:So Amena, are you an introvert or an extrovert?
Speaker:Ah, I think, you know, I'm somewhere clearly in the middle.
Speaker:I think there is a little bit of an introvert in me, but I love actually talking to people.
Speaker:I love especially talking to customers and partners.
Speaker:So for me personally, if there's a problem to be solved as opposed to just small talk
Speaker:to be had, I'm really happy talking to people to understand sort of what are their pain
Speaker:points and how can we do things better?
Speaker:How can we make an impact?
Speaker:In fact, making an impact is one of our core cultural values.
Speaker:So I would say I'm somewhere in the middle of being an introvert and extrovert.
Speaker:I am totally, I think the same Amena.
Speaker:We are twins here.
Speaker:I think we're on the same level because I absolutely love to learn from people.
Speaker:I absolutely love to kind of understand real topics.
Speaker:But yeah, I get bored by the small talk.
Speaker:You know, I go in to get my hair done or something and I'm like, I don't
Speaker:really want to just chit chat right now.
Speaker:So totally the same.
Speaker:We would get along so well.
Speaker:So one other question I had for you, and this is really just selfish on me because I've
Speaker:been toying with this question myself lately.
Speaker:Do you think it's more important to work on, like, promoting your strengths as
Speaker:a person or improving your weaknesses?
Speaker:I just keep thinking about this question lately and I thought, I'm
Speaker:gonna be asking some of these experts.
Speaker:What do you do?
Speaker:Where, where is that balance?
Speaker:Yeah, I think that's a great point.
Speaker:And I don't know if it's so much promoting your strengths as much as acting on your strengths.
Speaker:Because if you act on your strengths the results are self evident.
Speaker:And I think in terms of your weaknesses or your blind spots, it all starts with awareness
Speaker:to understand what do you need to be mindful of so that you can work to mitigate it.
Speaker:And that can be, you know, in whatever format it's in.
Speaker:Some people are, you know, like afraid to talk publicly or afraid to, you know hold court
Speaker:and, and engage in, in conversations that might take them to an uncomfortable place.
Speaker:And I think that's an important thing to have self awareness of so that you can actually begin
Speaker:to work on it and say, okay, this may not be a comfortable conversation, but I need to have it.
Speaker:I love that.
Speaker:So the awareness of your weaknesses.
Speaker:I am all too aware of many of my weaknesses.
Speaker:So yeah, sometimes I think, should I be acting on my strengths and focusing on that?
Speaker:Or should I just be trying to improve all those weaknesses.
Speaker:So I, I love that insight of awareness.
Speaker:So, okay, one thing that I really like to do and is important for me is as we're talking
Speaker:here today, if we had people who had to jump off that, you know, what are the key
Speaker:points you would want people to come away remembering from our conversation today?
Speaker:Let's just start with those, get them out of the way so we make sure
Speaker:that everybody gets value today.
Speaker:Yeah, so I think the gist of the matter is returns are expensive and they're friction filled.
Speaker:And that is true across you know, a number of perspectives, certainly from
Speaker:the shopper's perspective, it's a chore.
Speaker:It's something they need to do.
Speaker:It's also something that shoppers are increasingly wary of in terms of,
Speaker:hey, is this return free or not free?
Speaker:And more often than not, shoppers are actually judging whether they're going to shop with a
Speaker:given brand or retailer based on the policies.
Speaker:So I think it's a pain point for shoppers that needs to be addressed.
Speaker:It's absolutely a pain point for retailers and brands because it's expensive.
Speaker:It's an expensive from a number of perspectives.
Speaker:First of all, the cost of actually putting that item or good in the reverse supply chain.
Speaker:That's hard.
Speaker:So how do you manage that expense?
Speaker:The cost of not getting full recovery from that item.
Speaker:Are you getting 100 percent of the value back or are you getting a fraction or God
Speaker:forbid, are you just like not managing it and you're resigning it to landfill?
Speaker:So it's painful for shoppers, it's painful for retailers, and it's certainly bad from
Speaker:a circularity and sustainability standpoint.
Speaker:Yeah.
Speaker:So I think the answer needs to be something that, you know, technology software that
Speaker:says, how do you attack all of these dimensions and not be forced to say, I have
Speaker:to do this one dimension, and that's going to exact a toll on the other dimension.
Speaker:So I would contest that technology, if it's actually going to attack this problem, you know,
Speaker:needs to provide a win win win solution end to end from a returns and reverse logistics standpoint.
Speaker:And that's really what brands and retailers should ask themselves.
Speaker:Am I, you know, touching one part of the problem and pushing the problem somewhere else?
Speaker:Or am I attacking it systematically?
Speaker:Okay, so super interesting.
Speaker:I really like that.
Speaker:So technology needs to address the customer pain, the retailer pain, and kind of that
Speaker:sustainability circularity sort of general global pain that we experience with returns.
Speaker:Yeah, I know that returns have gone up exponentially over the last few years.
Speaker:You know, as we've become more and more comfortable with online shopping, as
Speaker:ecommerce is exploding and continuing to do so returns have continued to grow.
Speaker:I guess, what trends have you kind of seen in terms of how that's impacting maybe the customer.
Speaker:Let's start by talking customers.
Speaker:You mentioned them first.
Speaker:So customers, how, how is the returns process more of a pain, you know, more of a challenge
Speaker:for them than, say, even 10 years ago?
Speaker:10 years ago was a long time.
Speaker:I feel like as we started, returns were kind of a way to help people
Speaker:feel comfortable with ecommerce.
Speaker:You know, all those free returns.
Speaker:Today they do feel comfortable, but returns are still kind of a challenge.
Speaker:So what kind of pain do you see customers experiencing with returns
Speaker:and how is it different from the past?
Speaker:Yeah, so I think the sheer volume of returns has gone up.
Speaker:If you think about how much shopping you're doing, chances are at any
Speaker:given time, it's on your to do list.
Speaker:It's sitting on your kitchen counter or in the back of your car or what have you.
Speaker:So the sheer volume has gone up, and therefore the absolute magnitude of the friction or the
Speaker:pain from a shopper perspective has gone up.
Speaker:And that's because the volume of returns has gone up threefold, fourfold, fivefold,
Speaker:relative depending on if you're looking at the last three years, four years, five years.
Speaker:It's astronomic, right?
Speaker:It's 750 billion dollars worth of a problem.
Speaker:I think, convenience and ease has become way more important than it used to be, and that's because
Speaker:everyone candidly has been trained by like what the Amazons of the world have, you know, taught
Speaker:us to do in terms of box free, label free return.
Speaker:So I feel like that is, you know, that is sort of the the necessity in terms of what
Speaker:a brand or retailer needs to provide is make it easy and make it convenient for me.
Speaker:And I think that, you know, is there a cost of returning or not?
Speaker:That has become a really fraught issue for shoppers.
Speaker:Because as the cost to manage returns has gone up for brands and retailers, guess what?
Speaker:They're like, hmm, let me make sure I, my margins and my my profitability is protected.
Speaker:Tell you what, I'm going to pass that cost right back to the shopper.
Speaker:The problem with that, if you take a one size fits all solution, is twofold.
Speaker:Oftentimes your biggest returners are also your best shoppers.
Speaker:Okay, not always, but oftentimes, more often than not, if you're actually really engaged
Speaker:with a brand or retailer, you're going to have a high velocity of I'm shopping, I'm
Speaker:returning, I'm shopping, I'm returning, this is just what I do, I'm busy, I have things to do.
Speaker:I want to get my shopping in however I can.
Speaker:And that's part of my of my user journey or my, my flow as, as a shopper.
Speaker:So let's say you charge everybody for returns.
Speaker:What are you going to do?
Speaker:You're going to turn off the good people, the good shoppers, the profitable shoppers, as
Speaker:well as the unprofitable shoppers who perhaps are fraudulent, or perhaps they're wardrobing.
Speaker:They're doing things like that.
Speaker:So it doesn't make sense to do a one size fits all approach.
Speaker:The other challenge with that is that you're actually not deterring the fraudulent folks.
Speaker:So you need to take a finer lens to it.
Speaker:A more nuanced approach to figure out, wait a minute.
Speaker:Who are the likely fraudulent folks?
Speaker:Who are the trustworthy shoppers?
Speaker:How do I actually make it easier for my best shoppers to continue to build trust
Speaker:in my brand and to have that continue now?
Speaker:While on the same token, you need to absolutely manage your cost of returns.
Speaker:And that is all the messy reality of reverse logistics.
Speaker:You know, all of our logistics systems are designed to be working on, you know, outbound
Speaker:or forward logistics, like seamlessly.
Speaker:Stuff is good, it's packaged, it's per SLAs, it goes out.
Speaker:You know, life is a dream.
Speaker:What happens when all this stuff comes back?
Speaker:It needs to be received.
Speaker:It needs to be evaluated on is it new or not new?
Speaker:You know, is it per the the SOP as to what's defined as new?
Speaker:One brand may have one definition of new.
Speaker:Another brand may have a completely different definition.
Speaker:And then is it worth fixing it?
Speaker:Is it worth addressing it?
Speaker:And how do I get maximum recovery out of it?
Speaker:That is a multi step inherently kind of manual and human filled process that needs assistance
Speaker:from software and automation to make it go faster, to make it be more efficient in doing
Speaker:the recovery and to increase the velocity.
Speaker:Because the longer it takes to process returns, it means that inventory is tied
Speaker:up and it can't go to the next shopper.
Speaker:And you've got working capital, you know, tied up in there.
Speaker:So speed matters, and recovery matters.
Speaker:So I would say you got to look at both sort of the shopper facing side, and then the four
Speaker:wall side within, you know, an enterprise zone, DC or 3PL, as to how you drive both
Speaker:efficiency and recovery in managing returns.
Speaker:That was so awesome, Amena, and I have like 57 follow up questions, so get ready.
Speaker:So the, you said, that was like a mountain of valuable information there.
Speaker:And so I want to touch on it.
Speaker:First of all, so you mentioned customers.
Speaker:I totally get that.
Speaker:I am, I have seven kids and I pretty much do all of my school shopping, presents, Christmas online.
Speaker:It's just as a working professional, you know, how else can I get it done?
Speaker:So, there are a lot of returns.
Speaker:I am kind of people's ideal customer, you know, I'm doing a lot of shopping online.
Speaker:I'm doing a lot of returning.
Speaker:What do you see?
Speaker:You mentioned that they want convenience and ease.
Speaker:What are the most convenient and easy ways?
Speaker:So if I have a retailer out there saying, okay, I've got a great shopper.
Speaker:I know that they're not one that I want to turn off.
Speaker:What is the most convenient and easy way?
Speaker:What are you seeing from consumers?
Speaker:Yep.
Speaker:Great question, Lori, and you would be a dream customer for so many brands and retailers, right?
Speaker:So number one, you know, you've got your weekend to do list.
Speaker:The last thing you want to do is box and label the returns to get them out of your house, right?
Speaker:So box free, label free is, you know, the standard currency you need to offer.
Speaker:Box free, label free.
Speaker:Everybody got that.
Speaker:Box free, label free.
Speaker:Box free, label free.
Speaker:Nobody needs to be sitting there, you know, do I have tape, do I have
Speaker:whatever, does my printer, whatever.
Speaker:That is just so.
Speaker:Do I even have a printer these days?
Speaker:Yeah.
Speaker:Exactly.
Speaker:I mean, I think I have like three printers in my house and like 2.9 of them are
Speaker:not in operational order, you know?
Speaker:Yeah.
Speaker:They're like from the fax machine days, like they're there, but they're not really functioning.
Speaker:Yeah, exactly.
Speaker:So you want to do box free, label free, and then you need to have drop off locations that are
Speaker:super convenient for, you know, for the shoppers.
Speaker:So if you're out, you know, doing your errands or whatnot, it needs to be within
Speaker:like a couple of miles of where you are.
Speaker:You know, ain't nobody wants to wants to stand in line.
Speaker:Nobody wants to drive a long ways.
Speaker:Like, that really kind of kills the joy of shopping where you want
Speaker:it to be easy and frictionless.
Speaker:And by the way, if you're taking it back to the store, let's say it's a combination of a
Speaker:store return, a third party drop off, that store return needs to be as seamless as you know,
Speaker:showing a QR code, ideally getting some insight.
Speaker:Because as a brand or retailer, I want I want that data on why are you returning it?
Speaker:Is it something I need to pass on to my suppliers to actually increase my shopper
Speaker:delight to make sure that, you know, the product makes, meets the customer's needs.
Speaker:So you want to get that data and you want, you want that to be as easy as possible so that
Speaker:when you're in the store, returning doesn't require standing in line and lo and behold,
Speaker:you're like, okay, maybe I should buy this other product or maybe I should do the exchange.
Speaker:Which kind of brings me to another topic, which is that you want to make exchanges
Speaker:instant, and instant ship and instant refund in terms of how you offer it.
Speaker:And that's one of the areas we've put a lot of energy in is to basically say,
Speaker:how can we do right by the shopper?
Speaker:So you want to do right by your best shoppers because perhaps it was the size, perhaps it
Speaker:was the color, it didn't work out for them.
Speaker:You not only want to do that instant exchange, you want instant shipment
Speaker:of that, because time matters.
Speaker:You're trying to delight shoppers, and you don't want them to wait around until you send the first
Speaker:item back and then the second item is shipped.
Speaker:And what if that's out of stock?
Speaker:So we have an offering called Instant Exchange which has been really popular.
Speaker:Which is okay, if the size didn't fit, if this color didn't fit, if it's in stock,
Speaker:we will ship it out to you right away because we know you're a trusted shopper.
Speaker:And I think trust is a really important aspect of that entire commerce journey.
Speaker:And that's what engenders loyalty, frankly.
Speaker:I love that you bring that up because I had a personal experience where a company
Speaker:that I bought from online, I went to the physical store and they wouldn't let me
Speaker:return the item that I'd bought online.
Speaker:And because that experience was just very clunky for me, it didn't engender loyalty.
Speaker:It didn't make me feel like, okay, this was too hard.
Speaker:I'm not going to buy from them online anymore.
Speaker:So I love that.
Speaker:Okay.
Speaker:How do you find, so you mentioned the not one size fits all.
Speaker:So we do have these great customers that we want their returns to be easy.
Speaker:You know, Amazon, for instance, knows I'm a great customer.
Speaker:When I run and return things, they are never a problem because I buy 500 that I don't return.
Speaker:You know, I'm not a scammer.
Speaker:How do you find which of those customers are that, you know, trusted person that you're
Speaker:wanting to give a great experience to?
Speaker:Right.
Speaker:So I would say enter data science, enter machine learning, enter AI to basically say,
Speaker:who's, who's a trustworthy shopper or not.
Speaker:Some retailers have loyalty programs where implicitly they invite their best customers
Speaker:to, to be a part of the club, if you will.
Speaker:That's kind of a natural demarcation point.
Speaker:But if you don't have that, you have to have the, the data analytics and the
Speaker:data science to basically gauge you know, that level of trust to offer that.
Speaker:Let me just go back to the point you just made about the return.
Speaker:So it's also a truism that the face of retail has changed.
Speaker:Thank you, pandemic.
Speaker:And a lot of retailers are actually kind of reexamining not only merchandising strategies,
Speaker:but actually what's a physical footprint, you know, stores are getting to be smaller.
Speaker:Labor is really hard to find in stores.
Speaker:You know, when was the last time you went in and you got the kind of assistance
Speaker:you needed to find a size or whatnot?
Speaker:So labor is precious, and labor is really directed towards, you know, delighting shoppers
Speaker:in stores to drive as much commerce as possible.
Speaker:So now imagine what happens when the returns come back.
Speaker:So problem number one is that the online assortment generally is way bigger
Speaker:than what's, you know, in that store.
Speaker:So chances are when you walked into that store, they said, and tell me this is true.
Speaker:Well, that's online and that's not in store.
Speaker:So you can't return it.
Speaker:So that's a horrible customer experience, right?
Speaker:So you're like, I just went through all of this pain to return it and you turn me away.
Speaker:That is, you know, like really bad.
Speaker:And it was a big company, Amena, I was so surprised.
Speaker:I thought, oh, for sure.
Speaker:You know, if I went to some little small business, I could maybe see that, but I was shocked.
Speaker:Yep.
Speaker:So I would say the answer to that is twofold from a retailer perspective.
Speaker:Number one, you got to personalize the returns journey so that when you're actually
Speaker:given the options of where to return, you're actually nudged towards where you're
Speaker:going to have a satisfying experience.
Speaker:Now, most of the time, I would say more than half of shoppers take items back to the stores.
Speaker:For some retailers, it's as high as like 70, 80, 90%.
Speaker:It's gonna happen.
Speaker:So we actually are implementing our smart dispositioning right in the store.
Speaker:I mean, the same kind of intelligence that we've honed for what happens in warehouses, which is
Speaker:to say, how do you get the item to its best home?
Speaker:Why not bring that right to the cash register so that when Lori walks in with an item that
Speaker:was online, you're not turned away, but we've implemented, you know, products, software,
Speaker:technology that says, okay, sales associate, accept this item and instead of keeping it
Speaker:in the store where it will, like, go to die, basically, or be sold at a deep discount,
Speaker:which is why the retailer is turning you away put it over here to be sent to this
Speaker:particular distribution center or warehouse.
Speaker:So the onus needs to be on the retailer to make it right, as opposed to the,
Speaker:you know, half of shoppers who are walking into a store to turn them away.
Speaker:That is really our Optoro store's offering, which can help you do that
Speaker:in a very seamless, integrated manner.
Speaker:Okay, Amena, I'm curious about the fraud aspect because I do talk to people and
Speaker:they say, hey fraud is a big concern.
Speaker:And, you know, and it's growing just as the returns themselves are growing, fraud challenges.
Speaker:You mentioned, you know, that one size fits all approach doesn't really deter fraud.
Speaker:So do you have suggestions for how they can deter fraud?
Speaker:Yes.
Speaker:And I think it's a multi pronged answer as opposed to a simple answer and the multi
Speaker:pronged answer kind of goes like this.
Speaker:Number one as a retailer brand, you have to make a decision about when do
Speaker:you give a refund to a customer, right?
Speaker:And that is what matters the most to that shopper.
Speaker:When am I getting my refund?
Speaker:And that implicitly is why, by the way, more than half the people walk into a store if
Speaker:they can, because they know if they return the item, they get the refund right away.
Speaker:And some brands were providing, you know, refund at drop off as opposed to at inspection.
Speaker:And so you need to take a look at who is trustworthy as a shopper.
Speaker:And at what point are you providing the refund?
Speaker:Because to me is kind of that's a privilege and not something that
Speaker:everyone should take for granted.
Speaker:So implicitly when you're returning into a store, someone, someone
Speaker:can take a look and say, Oh, okay.
Speaker:You're returning a sweater.
Speaker:Does this look like a sweater?
Speaker:Does it look like it's in decent shape?
Speaker:And if you're actually dropping it off, I would submit that you have to
Speaker:connect the front end to the back end.
Speaker:You actually have to connect that decision about when you're providing a refund
Speaker:with what is actually being received.
Speaker:You know, the proverbial box of rocks or, you know, some other kind of scenario like that.
Speaker:You need to actually have the data to say, Lori is a frequent shopper and
Speaker:returner, she is a trustworthy customer.
Speaker:I'm actually not only gonna, you know, refund at drop off, but what if I actually refund at the
Speaker:first click when you actually go to do the return?
Speaker:Because I know you're a trustworthy shopper.
Speaker:That's where you need a lot of data to do that.
Speaker:And if and if you don't have that data and that data science and that, you know, instant ship and
Speaker:instant repurchase, then you have to say, okay, well, what's being received in the warehouse?
Speaker:And then I got to wait and see what the operator in the warehouse says as to
Speaker:was the item what it was supposed to be.
Speaker:Was it clearly worn?
Speaker:Is it damaged?
Speaker:And that's then going to drive another set of decisions.
Speaker:So I would say you have to have an end to end view of the data from who's
Speaker:the shopper to what's being received.
Speaker:And you need to have a lot of data science and machine learning to
Speaker:establish and define what trust is.
Speaker:Yeah, I I absolutely agree with that because I feel like we hear a ton in this industry about
Speaker:data and AI and machine learning and, and people don't really know where and how to use it.
Speaker:And I think that in some cases, you know, we're not ready for it in certain areas, but in returns.
Speaker:Absolutely, this is an area where there is a ton of data, a ton of information and
Speaker:where you should absolutely, if you do not have, I mean, to me, that's a big takeaway.
Speaker:If you do not have some sort of data you're really just kind of shooting
Speaker:yourself in the foot to start because that data is, is so critical in this case.
Speaker:So Amena, I'm hearing a lot of people.
Speaker:debating.
Speaker:I feel like in a way 2024 was sort of a year of debating, should I, you know, charge for returns.
Speaker:We're seeing, we are seeing rises in people charging for returns.
Speaker:Are there any best practices or guidelines for maybe when you should charge for a return?
Speaker:Yeah, I think the answer has to be personalization and it can't be, it can't be
Speaker:everybody pays or potentially nobody pays, because I think it really depends on the value.
Speaker:You have to look at the lifetime value of a given shopper as you're making that decision.
Speaker:Because without a doubt, if you charge for returns, it will be a deterrent to your commerce,
Speaker:to your total revenue, to your total sales.
Speaker:So before you take that step, you have to understand what problem am I trying to solve?
Speaker:Am I trying to reduce the cost of returns?
Speaker:Am I trying to drive my sales?
Speaker:Am I trying to do both?
Speaker:And the question is, how can you actually make returns a competitive advantage as opposed
Speaker:to this like necessary horrible evil that it can be if you don't manage it appropriately?
Speaker:So I would say for some customers, you actually want to increase the level of friction.
Speaker:The ultimate is to say, I'm going to charge you for that return or
Speaker:I'm going to make it a final sale.
Speaker:I will not allow returns at all.
Speaker:And maybe for some customers, that's absolutely the right treatment.
Speaker:And maybe that's for like the 1 percent of customers who are driving, you know, the
Speaker:100 billion dollars worth of fraud problems.
Speaker:But it's not for 99 percent of shoppers who are actually, you know, good customers
Speaker:and they're trying to do the right thing.
Speaker:So I think you have to take a finer lens to it than, you know,
Speaker:everybody's bad or everybody's good.
Speaker:Cause the answer is yes.
Speaker:Yes, exactly.
Speaker:And I love, you had such a nugget in there that there are, you can use
Speaker:returns to be a competitive advantage.
Speaker:Because for me and for all of us shoppers out there, you know, when your stuff comes and
Speaker:it arrives and it was good, you know, or it comes and it arrives and you need to return it.
Speaker:It's, you don't think about it until there's a problem.
Speaker:When there's a problem is where the customer experience is different than at a different store.
Speaker:So when I had a really bad experience not being able to return that that
Speaker:turned me away from that store.
Speaker:But if I have a great experience, it's also something that stand
Speaker:out, stands out above and beyond.
Speaker:Like, wow, that was way easier than other stores.
Speaker:And as you've pointed out, builds that customer loyalty.
Speaker:So I just, I wanted to make sure that was pointed out.
Speaker:I love that point about competitive advantage in returns.
Speaker:So you've mentioned we talked a lot about customers and their experience.
Speaker:What about the retailer themselves?
Speaker:What are some ways that they can make it less painful, less expensive,
Speaker:you know, less inefficient?
Speaker:What would be your top tips?
Speaker:Yeah, so, I mean, if you don't manage it retail returns are a real drain on the bottom line.
Speaker:Because for a 100 dollar item, it can cost nearly 30 dollars to actually do the
Speaker:processing and, you know, the transport, the markdown, all of those nasty realities.
Speaker:For for apparel and footwear categories like that, you can have as much as 90
Speaker:percent of the goods go back to stock.
Speaker:So speed to stock is absolutely critical, because the longer it takes a retailer
Speaker:to manage their returns, guess what?
Speaker:You are missing that peak season window for that item.
Speaker:Which means you're gonna need to mark that down.
Speaker:That's a really bad answer, right?
Speaker:You wanna and you you not only want to not mark it down.
Speaker:You actually want to satisfy other customers.
Speaker:I'm returning that item because it's too big or too small for me.
Speaker:Somebody else is waiting for that item.
Speaker:I don't want to give an out of stock to someone else.
Speaker:So I would say in their would be within 24 hours of when a given item is returned to a warehouse,
Speaker:it is already listed for sale to the next shopper.
Speaker:Like, that is what good looks like, and I would say evaluate your current systems to say, how
Speaker:long is it taking me to get items back in stock?
Speaker:Is it more like 30 days?
Speaker:Or is it more like 10 days?
Speaker:Is it more, you know, how long does it take end to end?
Speaker:And you're saying 24 hours is the key.
Speaker:So KPI is out there, everybody.
Speaker:We all love the nerdy numbers.
Speaker:Speed to stock.
Speaker:Amena is saying 24 hours is our, is our goal.
Speaker:Okay.
Speaker:24 hours after when it's returned.
Speaker:So the first thing to measure is how long does it take from when the shopper initiates
Speaker:to when that item is received in a warehouse?
Speaker:That's the first thing to measure.
Speaker:And that can usually be 10 days, 12 days, totally lapsed time from when I said I'm returning
Speaker:it to when I go drop it off somewhere to when it's actually centralized back in a warehouse.
Speaker:And then the second item is when it's received in that warehouse, how long does it take
Speaker:before it's listed for the next shopper?
Speaker:The best retailers, for them it's 24 hours because that space between, you
Speaker:know, literally that space between where it's received, where it's evaluated.
Speaker:So then you've got receiving and evaluation for whether it's new or not and when it's listed back.
Speaker:So good means it's 24 days.
Speaker:And then the other item I would say is what percent of items are
Speaker:you getting maximum recovery on?
Speaker:And the faster you are at doing this flywheel for reverse logistics, the
Speaker:less of a markdown you are taking.
Speaker:So that is time back to stock and that's percent recovery.
Speaker:So that then gets to, okay, let's talk about all those items that are not going back for stock.
Speaker:They're not new.
Speaker:How do you actually evaluate what percent are ended up in, in landfill and secondary channels?
Speaker:What's your percent recovery?
Speaker:And all of that means, are you getting that item to its next most
Speaker:profitable home if it's not brand new?
Speaker:And that, that means you need technology like Optoro's to say, is it worth repairing this item?
Speaker:Well, how much of the value would I get out of it?
Speaker:Can I automatically add like recommerce channels so that this can go find a second home?
Speaker:The easier you make it to actually get recovery from an item, the more likely
Speaker:you are to get a higher percent recovery.
Speaker:Is there a percent recovery, you know, KPI, best practice people should be shooting for?
Speaker:Well, one item is let's talk about the inverse.
Speaker:What's the amount that is sent to landfill?
Speaker:Because that landfill percent means I'm getting zero recovery out of it.
Speaker:So we have retailers who used to send, I don't know 10, 15, 20% to landfill.
Speaker:And now that number is down to like 1% or 2%.
Speaker:So we actually measure, we do an impact report every year where we
Speaker:measure what percent are recovered.
Speaker:And the good retailers are somewhere north of 95% of, of value recovered.
Speaker:Oh, that's amazing.
Speaker:So, okay, we're getting, I have so much I could ask you, but we're getting towards
Speaker:the end of our time and I wanna make sure we hit, you mentioned landfills.
Speaker:That sort of sustainability piece.
Speaker:I am seeing more and more as I'm talking to people out there concerns from their
Speaker:consumers about the sustainability.
Speaker:Returns is kind of getting a little bit of a black eye in the public in terms of
Speaker:how much we are sending beautiful brand new things into landfills and whatnot.
Speaker:So what, what recommendations I guess, do you have for companies out there when
Speaker:it comes to sustainability and returns?
Speaker:Yeah.
Speaker:I, I love that question.
Speaker:I, I'm a firm believer that you can actually do well and do good at the same time.
Speaker:That if you have the right kind of technology, it not only will boost your recovery, but
Speaker:it'll keep stuff in the circular economy.
Speaker:And I've seen so much data that says, you know, like 6 out of 10
Speaker:shoppers care about sustainability.
Speaker:I think recommerce is one aspect of that in terms of the, you know, gently used or previously loved.
Speaker:And a lot of brands and retailers are engaging in those strategies to refurbish and actually
Speaker:have trade in programs so you can return an item and it goes on to to its next home.
Speaker:I think, so you got to make it easy to plug that stuff in because you think about what's involved.
Speaker:Oh, wow.
Speaker:So now my recommerce company needs data about what, what's the catalog number for the item?
Speaker:Do they need to take pictures?
Speaker:Do they need to list it?
Speaker:So the easier you can make it to again, transmit the data the easier it is to relist it for sale.
Speaker:So I think you have to make it easy to get the item's disposition.
Speaker:That's the term of art.
Speaker:So we have smart dispositioning.
Speaker:To its next most profitable home, including recommerce, including donation and all of these
Speaker:other solutions so that it's not just wasted.
Speaker:I love it because honestly, sometimes people think, oh, sustainability and trying
Speaker:to be conscious of what I'm doing is more expensive or, and honestly, it's not.
Speaker:It's waste already.
Speaker:It's waste for your company.
Speaker:And so if you do it right, you can do it in a way where it's more profitable for you.
Speaker:It's not difficult for you and you're, you know, doing, doing well by the planet.
Speaker:So that is amazing.
Speaker:Okay.
Speaker:Any other things, tips you have for us before we go today?
Speaker:No, I'll just close with this one vignette, Lori, that, you know, a major national retailer
Speaker:had all of these baby goods coming back, right?
Speaker:So, you have kids, you know how much gear is involved, especially when they're little.
Speaker:So, we're talking car seats and playpens and strollers and backpacks and baby
Speaker:bags and everything else you can imagine.
Speaker:And because they didn't have technology to systematically determine whether this was up to
Speaker:code and it could go back, like the effort wasn't there, and they were just chucking all this stuff.
Speaker:And so we plugged in systematically a recommerce company that is now actually doing that.
Speaker:And it's a win, win, win because this retailer has managed to, they saved 2 million just in the first
Speaker:month of lighting up this recommerce company.
Speaker:Who then is doing the refurbishment and you have new parents who are buying, you
Speaker:know, goods at a discount that have been, you know, repaired and everybody wins.
Speaker:I know.
Speaker:I love that.
Speaker:And that is exactly how it should be with returns.
Speaker:Everybody wins.
Speaker:The consumer, the company, you know, and even the planet.
Speaker:So thank you so much for being here.
Speaker:So many truth bombs dropped by you today.
Speaker:So many great nuggets for everyone.
Speaker:And I just wish you the best 2025 ever.
Speaker:Thank you so much, Lori.
Speaker:It's been a pleasure talking to you and I wish you all the best.
Speaker:Great.
Speaker:One final thing, if anyone wants to connect with you.
Speaker:Yep.
Speaker:Optoro.com, O P T O R O.
Speaker:com.
Speaker:We've got a wealth of articles, blog pieces.
Speaker:And of course, reach out to us.
Speaker:Love to talk returns and reverse and how we might be able to help.
Speaker:I love it.
Speaker:Okay.
Speaker:We'll see you all next time.
Speaker:Thanks, Lori.
