Why Don’t Companies Have Chief Returns Officers?

Let’s face it. No consumer enjoys returning clothing, and no retailer likes receiving stuff back.

To add insult to injury, returns have become a “trillion-dollar problem” for retailers, impacting the entire value chain from supply chain and inventory to operational to customer experience, not including the increased cost and complexity returns have for some retailers.

So why isn’t the industry laser-focused on reducing returns? 

Navjit Bhasin, chief executive officer and founder of returns reduction company Newmine, believes there are a few factors at play. “First, returns have always been assumed as a cost of doing business. Second, there is no true owner of returns if you look inside any retail organization or brand. And last, it’s always been perceived as a complex problem to solve,” he said at Sourcing Journal’s Fall Summit 2022 session “Real Talk on Reducing Returns.”

Reducing returns costs

While Bhasin described returns as the “unsexy” part of fashion, the hefty financial damage they cause drives a need for returns mitigation to be front and center.

“If a billion-dollar retailer returns about 20 percent, that’s $200 million revenue leakage,” Bhasin said. “But once you lose that, the margins are gone.”

Currently, there are few—if any—retailers that have a chief returns officer whose job is to optimize, reduce or control returns. In turn, an entire company is impacted by returns—whether that be operations or merchandising—yet no one is accountable for reducing them.

To combat this, Newmine created its own Chief Returns Officer, a retail intelligence platform focused on solving merchandise returns for both big and small brands. The data-driven Chief Returns Officer helps retailers understand why their returns happened, and what they can do to lower the impact.

Additionally, the Chief Returns Officer is the only software as a service (SaaS) based returns intelligence platform—built on Microsoft technology and cloud services—that uses predictive and prescriptive analytics along with corrective action workflows to reduce returns and improve retailers’ financial performance and customer satisfaction

The Chief Returns Officer also improves the environmental impact of handling of returns, according to Bhasin. In fact, by focusing on lowering returns, retailers can reduce their carbon emissions, material usage, packaging waste and water pollution.

 “At the end of the day, the Chief Returns Officer is a win-win for brands, retailers and consumers,” Bhasin said. “Not to mention it’s one of those low-hanging fruits for those serious about their environmental, social and governance (ESG) mission and improving sustainability.”

The results for companies committed to reducing returns speak for themselves. The National Retail Federation (NRF) released a study that showed returns increased by about 56 percent between 2020-2021 when pandemic shoppers drove outsize e-commerce growth, but Newmine found that some of its clients were actually reducing returns—by around 15 to 20 percent.

“The moment consumers decide to return a product, the margin is already lost. And then, retailers are trying to find ways to reap any margins by getting the product back faster, optimizing the reverse supply chain journey or refurbishing and reselling it,” Bhasin said. “We’re not asking retailers to add additional headcount to do it. We’re just making their existing workforce productive and lowering their return rates through our artificial intelligence capabilities.”