Too Many Happy Returns: The struggle to predict reverse logistics

Joining forces

Regarding product returns, Amazon has set the standard for hassle-free reverse logistics. To meet these demanding expectations, the major integrators, such as UPS and FedEx, have made significant investments in the returns sector.

UPS, for instance, recently backed reverse logistics provider Optoro, Inc.’s latest US$30 million round of venture funding through its UPS Strategic Enterprise Fund. Optoro provides a “one-stop-shop solution” for returns and “excess inventory” experienced by retailers and manufacturers. UPS said it plans to use the Optoro alliance to offer a joint platform to help retailers reduce reverse logistics costs, including guidance on how to resell items once they are shipped back.

In August, UPS also began offering a free online tool giving e-commerce merchants options to customize return shipments. The tool, called UPS Returns Manager, gives merchant customers the option to print return shipping labels directly through the UPS website or at UPS stores.

Stu Marcus, UPS vice president of customer technology marketing, said that the Returns tool can be used by any shipper, but is expected to be most helpful for “small and mid-sized merchants that lack this capability in-house.”

The new UPS service could reduce processing costs for returns, which Marcus said may range between 10 to 15 percent of the cost of goods sold. Returns Manager also enables shippers to administer authorized return shipments, determine their desired service level, request a reason for return and then see tracking reports on their shipments, both outbound and return.

Meanwhile, earlier this year, FedEx Supply Chain launched FedEx Fulfillment, a service designed to meet the shipping needs of small- and medium-sized enterprises (SMEs), and to challenge Amazon’s dominance.

The new FedEx Fulfillment serivce – which was formerly a standalone company called Genco that FedEx bought in 2015 – integrates FedEx Supply Chain’s various logistics services, including warehousing, distribution, transportation, e-commerce fulfillment and reverse logistics, into a single platform connected to the rest of the integrator’s transportation networks.