Gartner® Hype Cycle™ for Retail Technologies, 2024
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Did you know that 2023 online apparel sales were close to $207.7 billion? And with a 20.8% return rate, the total returns would come to $43.2 billion, plus processing costs of $25.1 billion. So what’s a fashion retailer to do about the costly issue of managing returns? Ahead, we explore five tactics that can help retailers process returns faster, more accurately and at a lower cost.
Returns are an inherent part of the industry — people order clothes online that don’t fit as expected, change their minds about their fashion choices and buy gifts that the recipients wish they hadn’t. It’s not a problem that can be eliminated, but it can be better managed.
In fact, people are returning more items more frequently. According to a Narvar survey conducted earlier this year, 17% of consumers returned more than six items in the last six months, which is a drastic increase over the 7.1% who said the same in 2022. The resulting question on every ecommerce fashion retailer’s mind is: How do I process those returns as quickly as possible to minimize my losses?
Discounts and markdowns will only go so far in reducing returns-related costs. They’re helpful strategies, of course, but they don’t address the issue. To truly optimize the process, the key lies in the ability to bring returned products back to the shelf — AKA re-induction. However, re-induction is time- and labor-intensive, making it expensive and complicated. The solution? Robotic automation.
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Robotic automation streamlines the returns management process to maximize profitability. And, by utilizing AI-driven multiagent orchestration, retailers enable their sortation and conveying systems to continuously improve their efficiency with minimal direction, which translates into spending less time worrying about returns and more time taking care of them. Robots do the heavy lifting, freeing up the humans in the warehouse to do less tedious, more cerebral work.
Fashion retailers can explore five primary ways that technology can speed up the returns process and help improve their bottom line:
With the right bots and RFID tags, retailers can utilize AI-driven inventory management and Autonomous Mobile Robots (AMRs) for style sorting and item tagging. Some solutions can sort 118,000 items per MSU with 400 units per hour. Best of all, retailers can customize process flows for different SKUs, improving design criteria by 40-60%. AMR solutions aren’t limited to one process flow like fixed conveyor belts. They can be programmed to handle different items in different ways to ensure positive outcomes.
By recognizing returns, smart AMR solutions can position items strategically near the pick-put station to prioritize picking and reduce re-sourcing time. Intelligent inventory management capabilities ensure that returned items are being used before regular inventory, which accelerates the picking of returned inventory for resale by 2-4x.
Fashion returns automation is best used in tandem with human workers. By utilizing a user-directed approach, retailers can maximize induction and achieve putaway speeds that are up to 4 times faster than traditional methods. AMRs shine best when there are people around to help them out, and vice versa.
Using AI, AMR solutions can keep track of which items are aging on the inventory floor and use that data to automate reslotting. Furthermore, orchestration software can flag and audit items older than 30 days for removal to keep fresh inventory available. This way, the process of handling aging returns is one less burden on human workers, freeing them up to do less cumbersome tasks.
The overall benefit of implementing these technologies is a faster, less hectic fashion returns process. The same software that oversees the actions of the AMRs and inventory movement can optimize productivity by balancing picking, putaway, inspection and seasonal checks. This, in turn, can reduce the returns processing time from 3-4 days to 3-4 hours, or within a single shift. The sooner a return has been processed, the sooner it can be resold and its value recouped.
When part of an AI-powered solution, AMRs can help retailers recapture the value typically lost to the returns process. Handling returns this way speeds up the process by making it more efficient and less reliant on manual labor. In turn, the humans in your warehouse or fulfillment center will be happier, too. It’s a win for customers, managers and warehouse workers, and retailers would be wise to put this tech to use in their operations.