Reverse Logistics 📦

👋 Hello Loopers,

How is your summer going? 😎🍹 

A few days ago, I ordered a beautiful bag from a small online boutique. When it arrived, it was even more stunning than I had imagined. But it had a small crack. I was hesitant to return it, worried about the hassle and the environmental impact of shipping it back. 💚⚠️ However, the boutique had an incredibly efficient and eco-friendly return policy that not only made the process seamless but also reassured me that the bag would be repaired and resold rather than discarded. This experience got me thinking about the often overlooked world of reverse logistics.

Today we are covering:

Online shopping has transformed the way people acquire goods and services. Still, the convenience of buying from the comfort of our homes comes with a catch: returns. While returning items purchased online may be a hassle, it is an inevitable part of the e-commerce process. In 2022, the cost of retail returns in the United States reached a staggering $817 billion.

So, the question is: How can we reduce this cost and its environmental impact? 🌍

Did you know that 77% of returns in the US are due to incorrect size or fit? (*according to Blue Yonder Group). Using AR for a virtual try-on, such as clothing or furniture, in their own space before purchasing is a great way to allow customers to visualize products and reduce return rates 📉. Fashion brands and retailers are even experimenting with tools that let customers create digital twins of themselves that match their proportions and measurements, like a true-to-size avatar. These avatars are often based on customer-supplied measurements, images, and body-type details. Instead of overlaying an item on top of an image, this approach fits digital clothing onto digitized versions of the customer’s body to help them visualize how they will look and ultimately select the best size. 🛍️👗

Having an efficient returns management system can also reduce the environmental impact. That’s why centralized returns hubs are booming. This means establishing central locations where returns are processed quickly and efficiently to minimize transportation emissions. In these facilities, returned items are received, processed, and redirected for resale, refurbishing, or disposal. It’s a crucial component in streamlining the reverse logistics process for global retail companies. 💼 🚛

UTurn, a startup featured in this edition, offers an incredible solution: the items are not returned to the warehouse but are forwarded directly to the next customer, eliminating that intermediate step and reducing time and money. 🔄📦

Educating customers about the environmental impact of returns and encouraging more sustainable shopping behaviors can also make a significant difference. Offering clear, concise return policies that discourage unnecessary returns can significantly reduce the amount of returns. 📝📉

Managing returns efficiently isn't just a logistical challenge—it's an opportunity to drive sustainability and create significant value for businesses and the environment. 🌍💡

Jeans 👖 are among the most polluting items in the fashion industry, with each pair using an estimated 7,000 liters of water and harmful chemicals during production. With over 1 billion jeans sold yearly, the impact of recycling jeans and using organic cotton can be monumental. That’s where MUD Jeans comes in, setting a new standard for sustainable fashion.

MUD Jeans stands for sustainability and innovation in fashion, offering a unique leasing system to reduce waste and promote circularity ♻️. With their leasing model, you can lease your jeans for a small monthly fee. After a year, you have the flexibility to return them, swap them for a fresh pair, or keep them. Regardless of your choice, MUD Jeans offers free repairs, ensuring that your jeans last as long as possible. At the end of their use, MUD Jeans gratefully accepts your old jeans back, recycling them into brand-new pairs.

But, how does the leasing system work?

Lease and Enjoy: Pay a monthly fee for 12 months and enjoy wearing the jeans. During this time, MUD Jeans remains the owner of the raw materials.

Flexible Options After a Year: After 12 months, the jeans are yours, and the payments stop automatically. You can choose to keep the jeans at no additional cost, swap them for a fresh pair, or return them for recycling, free of charge.

By offering this lease system, MUD Jeans aims to maximize the use of each pair of jeans, preventing them from ending up in landfills and keeping them within their closed-loop recycling system.

This week, I had the pleasure of speaking with Ilan Ziv, the founder and CEO of UTurn. In response to the new fees for online returns, UTurn has devised an innovative solution. What if brands and retailers could resell their online returns before they are even shipped back? Let's explore how this reverse logistics strategy eliminates waste and reduces carbon emissions associated with the return process.

What inspired you to start UTurn and what are your future goals for the company?

I: The idea for UTurn came to me when I was head of eCommerce for a major fashion brand. While touring the warehouse, I witnessed firsthand the process of handling returns, known as reverse logistics. I saw workers opening packages, sorting items, ironing them, and then repackaging and placing them back on the shelves of a huge warehouse. I also noticed a pile of perfectly good items destined for liquidation. That gave me the idea that returns shouldn't be returned to the warehouse in the first place but rather be forwarded to the next customer. Knowing the process well, I realized that if we could conduct a reliable remote quality assurance process, we could design a return system that allows retailers to resell their returns before they are shipped back. This approach can cut the entire reverse logistics funnel, increase ROI on returned items, and reduce packaging and emissions. Our short-term goals are to expand our customer base, mainly in the US, and to secure enough funding to enter the growth stage.

How does UTurn contribute to sustainability?

I: Every day, in the US alone, more than 1.2 million parcels are returned. About 25% of these returns will end up in landfills, making returns one of the most polluting elements of eCommerce and retail. By forwarding returns to the next customer, we eliminate unnecessary shipments, shorten shipment routes, and eliminate the need for repackaging. Furthermore, we dramatically reduce the number of products that end up in landfills.

Can you share any milestones or achievements UTurn has reached recently?

I: After a successful pilot last year with a small footwear brand, we managed to sign a few major brands in the US. We can now showcase our solution and demonstrate its capabilities. For instance, in the footwear industry, 95% of items passed our remote quality assurance with no issues. AI can be easily implemented to make this process fully automated. We know that about 30% of returns can be resold within three days of the return request. Our fulfillment rate stands at 96%, and customers love that their return experience is both smooth and sustainable.

How do you envision the future of retail evolving?

I: With the development of AI technology and advanced circular commerce solutions like UTurn, warehouses will become just "last mile" hubs, and most of the inventory will be located and managed by end customers. Subscription-based eCommerce and try-before-you-buy models will thrive.

What advice would you give to aspiring entrepreneurs wanting to start a sustainable brand like UTurn?

I: Sustainability is important and a wonderful goal, but make your solution economically viable for your customers. UTurn works because it provides a better ROI for retailers, and as a wonderful byproduct, it also reduces waste and emissions. For it to grow, it has to make economic sense.

Sustainability Careers: Join this event for an evening focused on paving careers in sustainability and hear from experts at Coho, Asana, and JLL/Google for advice. August 7, 2024 - San Francisco, CA, USA.

2024 AWS Energy Symposium: an amazing opportunity where energy and utility leaders, partners, and startups will unite to forge the future of the industry as they reinvent energy, together. August 13-14, 2024 - Houston, TX, USA.

Are you passionate about sustainability and looking for your dream job? Here are a couple of exciting options:

• Sustainability Store Planning at Chanel

• Sustainable & Impact Investing Strategist at UBS

• Associate Manager, Sustainability Measurement & Analytics at Mattel

• Sustainability Scientist at AWS

Feel free to reply to this email if you'd like to showcase your events or if you'd like to be featured in the Loop Commerce community!

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See you next week!! 🕺🏽💚

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