Tag Archives: logistics

Anti-Gifting and Reverse Logistics

Google-search-gifts-returns

Call it what you may, but ’tis the season following the gift-giving season, which means only one thing, it’s returns season. Did you receive a gorgeous pair of shoes in the wrong size? Return. Did you get yet another hideous tie or shirt in the wrong color? Return. Yet more lotion that makes you break out in an orange rash? Return? Video game in the wrong format or book that you already digested last year? Return. Toaster that doesn’t match your kitchen decor? Return.

And, the numbers of returns are quite staggering. According to Optoro — a research firm that helps major retailers process and resell returns — consumers return nearly $70 billion worth of purchases during the holiday season. That’s more than the entire GDP of countries like Luxembourg or Sri Lanka.

So, with returns being such a huge industry how does the process work? Importantly, a returned gift is highly unlikely to end up back on the original shelf from where it was purchased. Rather, the gift is often transported by an inverse supply-chain — known as reverse logistics — from the consumer back to the retailer, sometimes back to a wholesaler, and then back to a liquidator. Importantly, up to 40 percent of returns don’t even make it back to a liquidator since it’s sometimes more economical for the retailer to discard the item.

From Wired:

For most retailers, the weeks leading up to Christmas are a frenzied crescendo of activity. But for Michael Ringelsten, the excitement starts after the holidays.

Ringelsten runs Shorewood Liquidators, which collects all those post-holiday returns—from unwanted gadgets and exercise equipment to office furniture and popcorn machines—and finds them a new home. Wait, what? A new home? Yep. Rejected gifts and returned goods don’t go back on the shelves from which they came. They follow an entirely different logistical path, a weird mirror image of the supply chain that brings the goods we actually want to our doors.

This parallel process exists because the cost of restocking and reselling returned items often exceeds the value of those items. To cut their losses, online retailers often turn to folks like Ringelsten.

I discovered Shorewood Liquidators through a rather low rent-looking online ad touting returned items from The Home Depot, Amazon, Sears, Wal-Mart, and other big retailers. I was surprised to find the items weren’t bad. Some were an out-and-out deal, like this comfy Arcadia recliner (perfect for my next Shark Tank marathon). Bidding starts at 99 cents for knickknacks or $5 for nicer stuff. The descriptions state whether there are scuffs, scratches, or missing parts.

“This recliner? It will definitely sell,” Ringelsten says. Shorewood employs 91 people who work out of a 100,000-square-foot warehouse in Illinois—a space that, after the holidays, is a Through the Looking Glass version of Amazon, selling unwanted gifts at rock-bottom prices. And as Americans buy more and more holiday gifts online, they’re also returning more, creating new opportunities for businesses prepared to handle what others don’t want. Call it “re-commerce.”

The Hidden World of Returns

UPS says last week it saw the highest volume of returns it expects to see all year, with people sending back more than 5 million gifts and impulse purchases. On the busiest day of that week, the shipper said, people sent back twice as many packages—1 million in all—than the same day a year ago.

But those returns often don’t return from whence they came. Instead, they’re shipped to returns facilities—some operated by retailers, others that serve as hubs for many sellers. Once there, the goods are collected, processed, and often resold by third-party contractors, including wholesalers and liquidators like Shorewood. These contractors often use software that determines the most profitable path, be it selling them to consumers online, selling them in lots to wholesale buyers, or simply recycling them. If none of these options is profitable, the item may well end up in a landfill, making the business of returns an environmental issue, as well.

Read the entire story here.

Image courtesy of Google Search.

Amazon All the Time and Google Toilet Paper

Soon courtesy of Amazon, Google and other retail giants, and of course lubricated by the likes of the ubiquitous UPS and Fedex trucks, you may be able to dispense with the weekly or even daily trip to the grocery store. Amazon is expanding a trial of its same-day grocery delivery service, and others are following suit in select local and regional tests.

You may recall the spectacular implosion of the online grocery delivery service Webvan — a dot.com darling — that came and went in the blink of an internet eye, finally going bankrupt in 2001. Well, times have changed and now avaricious Amazon and its peers have their eyes trained on your groceries.

So now all you need to do is find a service to deliver your kids to and from school, an employer who will let you work from home, convince your spouse that “staycations” are cool, use Google Street View to become a virtual tourist, and you will never, ever, ever, EVER need to leave your house again!

From Slate:

The other day I ran out of toilet paper. You know how that goes. The last roll in the house sets off a ticking clock; depending on how many people you live with and their TP profligacy, you’re going to need to run to the store within a few hours, a day at the max, or you’re SOL. (Unless you’re a man who lives alone, in which case you can wait till the next equinox.) But it gets worse. My last roll of toilet paper happened to coincide with a shortage of paper towels, a severe run on diapers (you know, for kids!), and the last load of dishwashing soap. It was a perfect storm of household need. And, as usual, I was busy and in no mood to go to the store.

This quotidian catastrophe has a happy ending. In April, I got into the “pilot test” for Google Shopping Express, the search company’s effort to create an e-commerce service that delivers goods within a few hours of your order. The service, which is currently being offered in the San Francisco Bay Area, allows you to shop online at Target, Walgreens, Toys R Us, Office Depot, and several smaller, local stores, like Blue Bottle Coffee. Shopping Express combines most of those stores’ goods into a single interface, which means you can include all sorts of disparate items in the same purchase. Shopping Express also offers the same prices you’d find at the store. After you choose your items, you select a delivery window—something like “Anytime Today” or “Between 2 p.m. and 6 p.m.”—and you’re done. On the fateful day that I’d run out of toilet paper, I placed my order at around noon. Shortly after 4, a green-shirted Google delivery guy strode up to my door with my goods. I was back in business, and I never left the house.

Google is reportedly thinking about charging $60 to $70 a year for the service, making it a competitor to Amazon’s Prime subscription plan. But at this point the company hasn’t finalized pricing, and during the trial period, the whole thing is free. I’ve found it easy to use, cheap, and reliable. Similar to my experience when I first got Amazon Prime, it has transformed how I think about shopping. In fact, in the short time I’ve been using it, Shopping Express has replaced Amazon as my go-to source for many household items. I used to buy toilet paper, paper towels, and diapers through Amazon’s Subscribe & Save plan, which offers deep discounts on bulk goods if you choose a regular delivery schedule. I like that plan when it works, but subscribing to items whose use is unpredictable—like diapers for a newborn—is tricky. I often either run out of my Subscribe & Save items before my next delivery, or I get a new delivery while I still have a big load of the old stuff. Shopping Express is far simpler. You get access to low-priced big-box-store goods without all the hassle of big-box stores—driving, parking, waiting in line. And you get all the items you want immediately.

After using it for a few weeks, it’s hard to escape the notion that a service like Shopping Express represents the future of shopping. (Also the past of shopping—the return of profitless late-1990s’ services like Kozmo and WebVan, though presumably with some way of making money this time.) It’s not just Google: Yesterday, Reuters reported that Amazon is expanding AmazonFresh, its grocery delivery service, to big cities beyond Seattle, where it has been running for several years. Amazon’s move confirms the theory I floated a year ago, that the e-commerce giant’s long-term goal is to make same-day shipping the norm for most of its customers.

Amazon’s main competitive disadvantage, today, is shipping delays. While shopping online makes sense for many purchases, the vast majority of the world’s retail commerce involves stuff like toilet paper and dishwashing soap—items that people need (or think they need) immediately. That explains why Wal-Mart sells half a trillion dollars worth of goods every year, and Amazon sells only $61 billion. Wal-Mart’s customers return several times a week to buy what they need for dinner, and while they’re there, they sometimes pick up higher-margin stuff, too. By offering same-day delivery on groceries and household items, Amazon and Google are trying to edge in on that market.

As I learned while using Shopping Express, the plan could be a hit. If done well, same-day shipping erases the distinctions between the kinds of goods we buy online and those we buy offline. Today, when you think of something you need, you have to go through a mental checklist: Do I need it now? Can it wait two days? Is it worth driving for? With same-day shipping, you don’t have to do that. All shopping becomes online shopping.

Read the entire article here.

Image: Webvan truck. Courtesy of Wikipedia.