Week Three discussion 2 replies. Please reply to the TWO students discussion post. 75 word min.

Reply to the TWO students' discussion posts with a minimum of 75 words each

Keisen Esquer

1. How big of a challenge are returns to e-commerce retailers? In other words, what's the scale and scope of the challenge?

Returns have become one of the most expensive and complex challenges in e-commerce because they impact nearly every part of the supply chain, including transportation, warehousing, inventory management, and customer service. The article explains that e-commerce returns increased by 70% in 2020, while holiday returns alone were projected to reach $70.5 billion, illustrating the enormous financial burden retailers now face. Processing an online return can cost between $10 and $20, excluding shipping, and online return rates are approximately three times higher than purchases made in physical stores. These costs reduce profitability while increasing operational complexity, making returns management a strategic supply chain function rather than simply a customer service issue (Lambert, 2021).

2. What new approach are some retailers now using to handle returns?

Rather than requiring customers to ship every product back, some retailers are now using artificial intelligence to determine whether returning an item is financially worthwhile. Companies such as Amazon, Walmart, Target, and Chewy sometimes issue customers a full refund while allowing them to keep, donate, or dispose of the merchandise when the cost of processing the return exceeds the value of the product. This approach reduces transportation expenses, warehouse labor, and processing costs while creating a more convenient customer experience. According to Christopher (2022), organizations that improve reverse logistics through data-driven decision-making can reduce costs while increasing customer satisfaction.

3. Critically evaluate—articulate both advantages and disadvantages—of the new approach to returns that you described in the earlier question.

The "keep the item" strategy offers several advantages, including lower processing costs, faster refunds, reduced transportation expenses, and improved customer satisfaction. It also decreases warehouse congestion and allows retailers to focus resources on higher-value merchandise. However, this strategy also presents disadvantages because it may encourage return fraud, increase customer abuse of return policies, and create unnecessary product waste if customers simply discard unwanted items. The article notes that cybercriminals have already begun exploiting these policies by manipulating retailers into issuing refunds for products they never intend to return. Although the strategy can improve efficiency for low-cost products, companies must carefully balance customer convenience with fraud prevention and long-term profitability through effective returns management policies (Ivanov, 2021).

References

Christopher, M. (2022).  Logistics & supply chain management (6th ed.). Pearson. https://www.pearson.com/en-us/subject-catalog/p/logistics-and-supply-chain-management/P200000003590

Ivanov, D. (2021).  Introduction to supply chain resilience: Management, modelling, technology. Springer. https://link.springer.com/book/10.1007/978-3-030-70491-4

Kapner, S., & Ziobro, P. (2021, January 11).  Retailers say skip returns of unwanted items.  The Wall Street Journal.  https://www.proquest.com/docview/2476504877/fulltext/834D9AFC83144B9FPQ/2?accountid=25320

Lambert, D. M. (2021).  Supply chain management: Processes, partnerships, performance (4th ed.). Supply Chain Management Institute, LLC.  https://www.vitalsource.com/products/supply-chain-management-processes-partnerships-douglas-m-lambert-v9780578927169

Jerald Henry

Retailers in the e-commerce sector are struggling with the issue of product returns on a massive scale both in terms of logistics and the finances. The problem lies in the impressive scale of it all; for ecommerce, around 30% of orders are returned, while in bricks and mortar this rate is between 8-10%. In the United States, it is estimated that $428 billion in retail merchandise was returned in 2020 (Clevertap, 2021). This boom is mainly attributed to items such as ‘bracketing,' in which customers order numerous sizes of an item to try at home and send back the ones that do not fit them. With so many returns, there's a complicated reverse supply chain for retailers, which adds up to billions in shipping, processing and restocking costs, and is a major cause of landfill waste and carbon emissions (Clevertap, 2021).

Some big brands are taking a different approach to these daunting expenses; Amazon and WalMart are among the companies that are now encouraging customers to not return unwanted items. It is reported that retailers are essentially paying customers to keep merchandise that the companies don't plan to resell (Kapner and Ziobro 2021). This "returnless refund" or "keep it" approach is generally used to low value goods or goods that may be damaged when returned, and generally the cost of return shipping and handling would be more than the value of the returned product.

A critical evaluation of this new method shows the pros and cons of this method. The biggest benefit is that the retailers do not have to pay for the reverse logistics, which include shipping labels, processing and warehousing. This also enhances the customer experience as they won't need to package and drop off a return, which can help increase brand loyalty. The disadvantages are however great. The biggest threat to this policy is the possibility of return fraud or abuse, where consumers may attempt to keep goods without paying for them or deliberately make them look damaged to retain them (Kapner & Ziobro, 2021). Moreover, retailers are vulnerable to teaching consumers that they do not have to pay for anything, as this may eventually reduce their profitability, and make their products less valuable.

 

References

Clevertap. (2021, July 29).  Ecommerce return rate stats 2021.

Kapner, S. & Ziobro, P. (2021, January 11). Retailers Say Skip Returns of Unwanted Items.  The Wall Street Journal.  https://www.proquest.com/docview/2476504877/fulltext/834D9AFC83144B9FPQ/2?accountid=25320