Reversing the Trend: How Local Market Hubs are Boosting E-Commerce Profits Through Smart Returns

Managing returns effectively is crucial for retailers aiming to improve operations and increase profits. Recently, Huckberry, Narvar, and Fillogic shared insights from their work on implementing smart return solutions.

The greatest improvement in this new approach to smart returns management is the strategic relocation of where returns are processed. By integrating local market hubs into the returns process, retailers can dramatically enhance fraud prevention, reduce transportation costs, and cut returns damages in half.

At a recent LinkedIn Live event, leaders from Huckberry, Narvar, and Fillogic discussed their strategies for managing returns. These approaches address return challenges while improving customer satisfaction, profits, and environmental impact. Here's a summary of how these companies worked together to create new solutions for e-commerce returns.

Understanding the Returns Challenge

Returns are a major problem for retailers. Customers return over $744 billion worth of products annually, representing around 18% of all e-commerce sales. This figure can reach 30-40% for some categories, like apparel.

Narvar's Chief Customer Officer, Anisa Kumar, highlighted that 80% of e-commerce expenses occur after the buy button, emphasizing the importance of post-purchase management in reducing consumer fraud and abuse. She pointed out that 10% of returns are fraudulent, while 30% are abusive.

A recent survey found that 57% of consumers in the United States admit to committing either fraud or abuse for e-commerce purchases. Kumar said addressing these issues requires data analytics, AI, and robust logistics solutions.

Kumar shared that Narvar handles many returns and uses data analytics to improve post-purchase activities and prevent fraud. "We've been able to close many gaps in the existing reverse logistics infrastructure, providing tools and solutions that improve the customer experience while reducing costs," she said.2. Local Market Fulfillment:

Efficient local market fulfillment demands strategic partnerships and integrated logistics solutions. Ineffective partnerships or siloed processes can impede smooth supply chain operations, hindering retailers from meeting customer demands. 

By adopting a channel-free mentality and leveraging technology-driven solutions, retailers can optimize local market fulfillment, which includes ecommerce or store fulfillment, ship from store, curbside delivery, etc., to ensure timely deliveries and customer satisfaction.

Creating ROI Returns

Bill Thayer, founder of Fillogic, emphasized that most return problems occur because companies process returns too far from customers. This leads to high freight costs, long processing times, and increased fraud. Thayer explained how Fillogic works with post-purchase partners like Narvar to lower costs and improve customer satisfaction using Local Market Hubs in cities across the US.

Thayer highlighted how Local Market Hubs improve a retailer's profits:

• Lower costs: Reduce freight and processing costs by as much as 50%
• Reduce fraud: Minimize fraudulent returns to less than 1%
• Improve inventory viability: Achieve an 85 to 90% resell rate for returned products

These results are better than industry averages, where typically only 60% of returned products can be resold as new. Fillogic's Circularity Marketplace, powered by Local Market Hubs, achieves these results by processing returns closer to consumers.

Al Sambar, a VC investor in Fillogic, noted how faster, local processing at Local Market Hubs helps reduce carbon emissions from transportation and diverts waste from landfills and incinerators.

Huckberry’s Strategic Adaptation

Nick Meister, VP of Operations at Huckberry, discussed how the company adapts to changing e-commerce demands. Huckberry has developed a return solution that balances customer satisfaction and profitability.

"Through Narvar and Fillogic, we've built a single pane of glass for our customers, allowing them to manage returns seamlessly through a unified platform," Meister noted.

Huckberry is also preparing customer education and policy changes. Meister mentioned that 60% of retailers now charge for returns, indicating that companies are changing how they manage customer expectations and costs.

Looking Ahead: Sustainability and Efficiency

Sustainability was a key topic throughout the discussion. Thayer emphasized Fillogic's commitment to reducing carbon emissions by promoting product recycling and resale. This approach uses local market hubs and existing infrastructure to process returns and reduce transportation needs.

The executives also discussed the upcoming peak retail season, stressing the need for retailers to improve their delivery systems to capture more sales and handle returns efficiently. Local Market Hubs play a crucial role in this, offering a flexible solution for managing seasonal changes. Kumar is interested in how consumer expectations about shipping speed and cost will change, especially with new social commerce platforms like Shein, Temu, and TikTok.

Meister predicted retailers will continue to add steps to the returns process, moving away from the "free and easy returns" model.

Shaping the Future 

The event highlighted the need for better solutions in managing returns and reverse logistics. Local Market Hubs are leading this change in retail logistics. By using these hubs with advanced technology, partnerships, and customer insights, Fillogic is turning return challenges into growth opportunities.

Fillogic, Narvar, and Huckberry are showing how Local Market Hubs can significantly improve e-commerce. As the industry changes, these insights will help retailers succeed in a competitive market.

Discover how Fillogic is shaping the future of retail logistics and explore partnership opportunities by visiting www.fillogic.com

The recorded LinkedIn Live session can be found here.