Putting forward reverse logistics

Big Data and Costly Returns

Just as advanced data analytics are proving more and more valuable for forward logistics, they are critical for better understanding returns, everything from the time it takes a consumer to return a product to when in a buying season or a product cycle there’s a greater chance for returns. Big data can be applied, not just to assess returns, but to better understand consumer buying patterns. This can help determine future demand, knowledge that can be applied to everything from marketing and pricing to order patterns from suppliers. The more data on returns that can be analyzed, the more likely returns can be trimmed in the future.

“It’s incredible how much data we’re collecting on consumers now,” said Manzione. “We’re creating profiles that are unique to not only the individual but we can cross-reference across multiple consumers, across all consumers, to really understand patterns that will reduce returns.”

Returns technology providers “are trying to help customers get their arms around all the different types of analytics surrounding returns and how to make better decisions about how to avoid returns, how do you make better decisions on your purchasing and your forward logistics forecasting and how do you get better prepared for returns that are coming back,” added Waldrop.

Those in the industry see a point where data analytics will predict the odds that a good is going to be returned, and when, which will allow retailers to build that probability in their costing model, both for the product and for the individual buying it.

Manzione, for one, pinpointed retailers who provide goods on a monthly subscription model as being in the forefront of this trend, citing cosmetics and baby products as two successful categories. They are using data to make better decisions on what goods to offer. “The returns to those companies are going dramatically lower month to month because [these companies] have a better understanding based on the data they’re getting on what the consumer wants,” he said.