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The biggest unnecessary expense in e-commerce operations

As a one-stop-shop for returns management we are continuously in conversations with partners in the e-commerce supply chain, from (r)e-tailers such as AO and BCC to premium brands and manufacturers. We hear and see different processes that organizations have built for reverse logistics and where the needs are. Therefore, we have a lot of operational knowledge and experience present, that safekeep the full operation.

To learn where organizations can find the biggest profit in dealing with returns management, we talked with all-round operational expert and Site Manager at BuyBay: John Warnar.

John Warnar: site manager bij BuyBay

For almost 30 years he has been working in operations, and we are grateful to have his knowledge and experience present. We asked him the following things:

Where do you think the biggest unnecessary expenses lie in returns for e-commerce players?

John: “What I have seen often and still see, is that businesses use specialized repair shops to process returns. Returned items are then shipped to them directly. Laptops get sent to a laptop repair shop, phones to a phone repair shop and game consoles to a game console repair shop. On the one hand it makes sense, but it does create lots of extra costs that are unnecessary.”

What makes the use of specialized repair shops inefficient?

John: “Look, I have been in the operations profession for almost 30 years, so I’ve seen a lot pass by. It is such a shame when specialized repair shops are used for returns management, as not every return needs to be repaired. Experience taught us that in 85% of the cases a return does not need to be repaired. At these specialized repair shops you do pay for the unnecessary processing to draw this conclusion. Next to that it can easily take weeks before a product has been processed. This creates a long turnaround time and eventually the repair shop sends the products back again to the selling party. They usually do not have a sales channel by themselves, so the responsibility then stays with the e-commerce player.

Bottom line it creates an enormous logistic process that you must coordinate yourself, while the chances are big that you will be making costs instead of generating revenue.”

What does a good returns process need according to you?

John: “What I have learned, is that outsourcing the returns process end-to-end via 1 party creates the most value. Imagine that you could have all types of product categories delivered at the same party in one shipment, where all equipment and skills are available to test the items and make them ready to sell again. Then you do not have to worry about selling these returns afterwards and can save lots of space in the warehouse.

That is exactly what we are up to at BuyBay. From end to end we take care of the returns process in all product categories. And thinking along about tailor made solutions for organizations is what we do on a daily basis.”

What tip would you give to people in an operational role at e-commerce players?

John: “In returns management it is key to keep the end goal in mind: how can you sell returned products in a streamlined process without unnecessary logistic processes. Create an easy overview for yourself so you can focus on the core of your operational activities. And keep in mind that even in returns management there is a serious profit to benefit from if you do it efficiently. Over 90% of returned items can be sold again within 3 weeks without the need of a repair.”

Want to know more in the operational processes at BuyBay?

Interested in learning more about the operational processes that we use at BuyBay to guarantee that returned items can be resold in an optimal state and at the highest return? We would love to tell you more about how we work in a personal chat. Please fill out this form and we will contact you!

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