The holiday season may be over, but logistics professionals are still in the thick of it, dealing with a wave of returns that has grown so much in recent years that many in the industry are referring to the January returns season as a “second peak.” Coming on the heels of peak shipping season, that wave of returns is keeping warehouses nationwide buzzing with activity.
Technology is here to help with that. High-tech solutions are finding their way into all aspects of the supply chain, and reverse logistics is no exception. More companies are turning to robotic solutions and advanced software to help them manage an avalanche of returns—which the National Retail Federation (NRF) projected would add up to nearly $850 billion in 2025.
“[January is] absolutely a second peak,” says Kait Peterson, vice president and head of marketing at autonomous mobile robot (AMR) developer Locus Robotics. “Many people don’t know that we handle a lot of putaway and returns with our robots, in addition to picking.
“When we see an increase in peak season, we see an increase in returns. And we’re expecting this year’s peak season to set new records for units processed [throughout] our network.”
As of late November, Locus Robotics had delivered 3,000 peak-season robots to customers, under its robots-as-a-service (RaaS) model, to help them scale up and manage this year’s volume. Those robots are typically kept through the end of January to assist with returns-related activity, according to Peterson.
Other tech-based products are helping to stem the tide of returns, ease labor constraints, and promote a more circular economy in this extended peak as well. Here’s how.
EFFICIENT AND COST-EFFECTIVE
AMRs have long been used to assist warehouse associates with picking tasks, essentially automating the process by reducing the amount of aisle-walking and heavy lifting required. Locus Robotics’ collaborative AMRs do just that: The robots visually guide workers to their next closest pick, which speeds the picking process and minimizes human walk time. What’s more, once items are loaded onto the robot, the robot carries the load for the worker, eliminating the need for workers to push heavy carts through the warehouse.
Locus Robotics’ AMRs are increasingly being used to assist with putaway as well.
“When you implement LocusBots robots, you also have a putaway [function],” Peterson explains, noting that the robots’ interface for putaway is the same as for picking. This allows users to program the AMRs to move individual items, containers, or cases from receiving to storage, which can be done to prep for holiday shipping and to handle returned items that make their way back to the warehouse. Instead of inducting inventory onto large carts that associates would then push through the warehouse, inventory is inducted onto the robot, which travels to the appropriate location for putaway. An associate then places the items into storage, using the robot’s interface to verify that the item is in the right slot.
“It’s literally like picking in reverse, with a couple of different verifications,” Peterson says, emphasizing the productivity and accuracy gains facilities achieve when applying the process to returns. She points to one Locus customer, third-party logistics services provider (3PL) nGroup Performance Partners, to illustrate the point.
nGroup was experiencing considerable challenges in the putaway process at its 1 million-square-foot facility in Franklin, Indiana. Its process required associates to push heavy baker’s carts full of items across 30,000 square feet of the warehouse to more than 500 locations stocked with gaylords—large-capacity industrial containers used for storing bulk items. The process placed a physical strain on employees and created inefficiencies in handling returns—the sheer number of employees involved in the process created traffic jams in the warehouse, for example, making the process prone to accidents and inaccuracies.
nGroup decided to automate the process with the AI (artificial intelligence)-driven LocusOne platform and a fleet of the company’s AMRs. The system is integrated with nGroup’s returns management system (RMS), which tells the robots where to deliver the items in the warehouse—back into storage for resale or to another part of the facility.
Since automating the putaway process, nGroup has experienced a 229% increase in putaway productivity at the facility, regularly putting away nearly a million units per month. Company leaders say safety and employee satisfaction have improved as well.
Peterson says the bots also help lower a company’s “cost per touch,” which is a big contributor to waste in the supply chain. Companies incur a cost every time an associate touches an item, so when you’re dealing with returns, that cost escalates: You’re paying for the initial pick plus the work to receive the item back into the warehouse, put it away, and then pick it again.
“Sometimes, [companies will] just dispose of the item because they don’t want to spend money on labor to have it picked again,” Peterson explains. “For lower-cost items, this is a big source of waste. By adding robots, we lower the cost per pick and add to the efficiency. And that makes it easier to resell the item—in retail or wholesale at other locations, or in a secondary market.
“It makes it more cost-effective to use robots rather than manual labor.”
SUSTAINABLE AND CHARITABLE
Disney Petit, founder and CEO of California-based reverse logistics technology company LiquiDonate, puts some numbers to the high cost of returns: She says it costs a retailer $15, on average, to process a return, making it unprofitable to deal with lower-cost items. As a result, many retailers will refund the customer and tell them to just keep the unwanted item—a practice Petit says paves the way for fraud and waste. When that happens, the retailer loses control of the item, which could end up in the trash or be fraudulently returned.
“[Putting the onus] on the consumer to throw it away is not great—and could lead to returns fraud,” she says, adding that up to 80% of returns never make their way back to store shelves, instead ending up in the trash or languishing somewhere in the warehouse. “This is an operational and environmental concern. It’s a huge but hidden problem.”
Petit knew there had to be a better way, so she founded LiquiDonate four years ago, drawing on her experience in logistics and her passion as a self-described activist. She got her start in logistics working for food-delivery platform Postmates, where she helped develop a software solution called FoodFight! that helps restaurants and grocers donate excess food to local shelters, nonprofits, and food pantries. After 10 years with Postmates, she decided to turn her attention to the waste involved in consumer returns.
“The food space was well covered, so I wanted to solve the problem for retailers and reverse logistics,” she says, pointing to the large number of returns that end up in landfills every year—some estimates say 11% of returned apparel winds up in a landfill. “I knew this was an issue because I am an environmentalist—I’ve been an activist and community organizer since I was 16.”
Today, LiquiDonate offers a returns and warehouse management software solution that helps retailers route unsellable returns to local nonprofits.
“The way reverse logistics is being handled today, acceptable disposition outcomes are typically return the item to the warehouse, tell the customer to keep the item, or send it to resellers,” Petit explains, pointing to donation as an additional but underutilized outcome. “We’re trying to get rid of this liquidation flow where products are purchased for pennies on the dollar or end up in a landfill.”
LiquiDonate’s software integrates with a company’s RMS or warehouse management system (WMS); retailers can also access it via their Loop or Shopify connection. Based on a company’s pre-set parameters, LiquiDonate determines whether a product can be returned to the warehouse and resold or donated to a local charity or school. LiquiDonate partners with 4,000 nonprofits across the United States and Canada and, as of last year, had “matched and moved” more than 12 million items that otherwise would have ended up in landfills, according to Petit.
“The company knows what they want back and what they don’t,” she explains. “We help retailers turn their returns into local donations instead of landfill waste.”
LiquiDonate works with about 150 retailers, who use the company’s consumer-focused Returns Direct solution and its Warehouse Direct solution, which helps retailers clear excess inventory, also via donation, from their warehouses. The company is also in the process of developing a recycling solution, which will help with the disposition of items that can’t be donated—a glass vase with a chip in it, for example.
Petit likens her work today to her early days at Postmates, where she says she learned about the logistics industry’s power to solve business problems **ital{and} make a difference in the world.
“Using logistics and software, you can actually solve real problems at scale. It’s not just getting [someone] their burrito at midnight because they want it. You can actually do food rescue,” she says. Petit believes the same can be done for returns, emphasizing the millions of items donated via LiquiDonate’s platform to date and the company’s potential to make an even bigger difference on the warehouse cleanout side of things. “It’s kind of absurd how much gets stuck in these warehouses … we’ve been trying to get in there and figure out how to make it easy for them.
“I can’t wait until we have enough people and traction and things like that so I can go on a warehouse tour and say, ‘Please let me fix this problem for you.’”
