Before joining software-as-a-service (SaaS) company ReverseLogix, Chuck Fuerst, the firm’s marketing VP, remembers a common warehouse challenge: the dedicated returns area. When warehouses received goods back from stores or customers, they put shoes, garments and consumer electronics aside. Those items then remained on shelves, collected in bins and out of the supply chain until the manual labor was available to sort through them. That, he notes, was a time-consuming and sporadic project that he found warehouse operators faced across most facilities.
With a growing number of omnichannel sales taking place in the past few years, Fuerst says, heavier volumes of consumer goods and apparel are going back to distribution centers, where items are received and processed as returns. ReversLogix sells a solution known as the Returns Management System (RMS), intended to overcome that problem by managing product returns from consumers through stores, logistics companies and eventually back into the supply chain. The company serves third-party firms such as DHL and FedEx, as well as retailers and brands of apparel and consumer goods.
Chuck Fuerst
The SaaS platform can be integrated with a variety of systems and technologies, including warehouse-management software and identification technologies ranging from barcode scanners to tablets, smartphones and RFID readers. The solution is designed to enable a transparent and seamless returns process for those handling products, while also providing management with analytics regarding product return trends. The company, located in Burlingame, Calif., has offered its SaaS platform since 2014, but its growth has accelerated during the past 12 months.
“With ecommerce growth,” Fuerst explains, “more people are buying their products online, and the flow of returns has grown exponentially.” Traditionally, warehouses have often dedicated a corner or area to returns. “They would set aside a certain day of the week or day of the month” to go through all the returns at once, Fuerst says. “It was this big kind of ugly problem.” Goods dwelling in returns areas represent inventory that could potentially be resold, he notes, “and that becomes even more paramount now,” due to supply chain issues that have led to delays in shipments and missing inventory.
The ReverseLogix solution typically starts with the end customer, either a store or a consumer. If someone needs to return a product, they can visit the brand’s website. The company’s software operates in the background. Users log into their account, and the software directs them through a series of steps to secure their returns. They can follow steps indicating why the items are being returned, including whether they were defective, a poor fit or the wrong color. “Our platform features an algorithm that can identify the best return location, based on a variety of parameters,” Fuerst says.
The software leverages a shopper’s address information, enabling it to locate the closest store where the item could be returned. If a retail brand is using the ReverseLogix system, it could direct the shopper back to the store that sells the product. The retailer could use the software platform to further attract customers to enter the store for product returns—for instance, by offering a coupon for 10 percent off if they returned to that location.
The software collects all the relevant data and integrates it with the company’s own management software. ReverseLogix then offers several options for third-party logistics suppliers or brands to identify goods as they are received back into a warehouse. The trigger point could be a barcode or a QR code containing a traditional serial number printed on the label, or an RFID tag if companies are applying tags to their goods.
When the receiving store prepares to send products back to a warehouse, employees use the software not only to identify the shipping destination, but also to print a return shipping label QR code. The data can then be shared with the receiving warehouse so that it knows what to expect, and the software can route the product back to the distribution center where it can be sorted and rerouted. Typically, the system determines where that product should be shipped next. For example, if it requires maintenance, the reverse-logistics process identifies the nearest repair site. If it’s a garment for which sales are more likely at one geographic area than another, it can be routed accordingly.
“We can do all of this proximity-based return logic within the platform,” Fuerst says, “and that extends to even just returns that maybe traditionally go to a warehouse.” If a customer were to return a pair of shorts in Minneapolis in September, for instance, that garment could be taken to a consolidation point that would then route it to a warm-weather area, such as Florida or California. At the warehouse, operators can scan the product’s QR code or, theoretically, read a passive UHF RFID tag if the product comes with an RFID-enabled label. So far, however, few of the customers with which ReverseLogix works are using RFID technology for this purpose.
The scan or tag read opens the ReverseLogix software, which guides the operator through the next steps. Many products require some verifying inspection, and then a grading that determines what will next happen to that item. Users can select prompts as they go about the processes. If, for example, a buyer has indicated that the product has a defect, or if it doesn’t fit properly, the operator would be directed to provide the appropriate level of inspection. The product might need to be cleaned, pressed, repaired or simply retagged as new merchandise.
Third-party logistics companies are increasingly providing such services for brands that may have previously managed returns at their own facilities. That transition has occurred as returns are taking place more often and require faster throughput. For companies like DHL, that means new orders come in and operators must pack and ship the goods, and that the same site is used for handling the reverse stream of goods as they are returned.
The manual version of returns management often requires significant time on the part of warehouse workers. A company will typically print out general instructions for managing the various products being returned. If the returned items are clothing, for instance, there are five steps that must be followed, while tablets or smartphones would require other processes. “All of that was very manual and cumbersome,” Fuerst states, “and required a lot of training.”
In recent years, brands have been increasingly hiring third-party providers such as DHL to manage the reverse logistics process. Using the software, DHL can efficiently manage both outbound shipments and inbound returns at its facilities. “It could be consumer electronics, it could be clothing and it could be a whole variety of things,” Fuerst states, “but DHL might manage any of those, and all in the same site.”
The system provides analytics for those who want to know which products are being returned—and why—on a trends basis. Brands, for instance, could determine if a product’s components may have a fault, or if a particular clothing style does not fit customers well. ReverseLogix’s customers include both brands and logistics providers. To date, few of the companies are using RFID tags for returns management at the warehouses level; however, the company has received inquiries, meaning the future may include RFID-enabled data use with the software.
Ultimately, Fuerst says, the software is intended to make returns more seamless for shippers and retailers, but also to benefit shoppers, which means fewer customer service calls and queries. When consumers can use the system to return items, as well as view the status of their return, he adds, they are less likely to send an email or make a phone call asking, “Where’s my refund?”