Retailers urged not to overlook reverse logistics as pressure to boost profits in 2017 continues to mount

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Retailers are failing to adequately review the efficiency of their reverse supply chains, particularly when it comes to the quick and effective disposal of returned, excess and unwanted stock, claims retail expert Howard Rosenberg, CEO of B-Stock Solutions.

New research has revealed that, despite frequent and significant investment, only three per cent of retailers in the UK have succeeded in making a profit while fulfilling omnichannel demand.[1] Additionally, just 10 per cent of retailers globally said they were able to achieve profits alongside omnichannel fulfilment, whilst a study by Deloitte[2] has revealed that retail profits are due to fall by around 5 per cent this year.

With these troubling statistics, pressure is mounting on retailers to ensure their business is as profitable as possible. B-Stock Solutions, which works with the world's largest retailers helping them manage and re-sell returned merchandise, believes that, retailers should invest in technology and services that make their reverse supply chains more effective. This includes technology-based solutions for returned and excess merchandise that can't go back on store or virtual shelves and is slated for liquidation.

Practices such as leveraging web-based, online auction liquidation marketplaces that connect returned and excess stock directly to business buyers are helping retailers to improve the efficiency of their reverse logistics programs; what's more they set up a dynamic where many buyers push prices up (versus a handful of jobbers negotiating them down). This type of technology not only delivers the highest possible price in the market at the moment, but it also automates the sales process, delivers a faster sales cycle and generates proprietary market intelligence in the form of real data on market prices.

According to Rosenberg: "Estimates show that returns cost UK retailers £60bn a year, £20bn of which is generated by items bought online.

"As the proportion of online purchases increases, so will the cost of processing a greater number returns. Even greater pressure will be placed on the existing dynamics of many retail operations, especially in terms of how they handle these returns, many of which can't be put back on the virtual shelves.

"Reducing internal costs through the handling of returned merchandise and maximising the recovery on the stock slated for liquidation should be key for retailers. By looking beyond traditional methods of liquidation, retailers can create a versatile, sophisticated solution that optimises cash into the business from customer returns and helps to achieve maximum efficiency."

Source:
[1] https://www.retailgazette.co.uk/blog/2017/02/just-3-percent-of-retailers-profit-from-omni-channel-fulfilment-study-finds
[2] https://www.retailgazette.co.uk/blog/2017/03/retail-profit-margins-to-drop-by-5-percent-this-year-according-to-study

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