8 minutes of eComm Wisdom: Kyle from Two Boxes

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I'd say historically, most brands have really focused, on

making it a great experience for Tim to go to the website and initiate his return. There's a ton of tools to use that, or to accomplish that, You know, Loop and AfterShip and Happy Returns and Narvar and return go and so many more.

I think the second thing that a lot of brands have to think about is actually return freight. It's not really that sexy, but, should you be using, a parcel,freight option?

Should you be using a consolidated freight option like, like what Happy Returns and some others in the space can offer for you? But there are trade offs there between speed and cost, and the ability to restock inventory really quickly. So a lot of brands don't think about that when they move towards a consolidation service and they get surprised by the speed or lack thereof of those options.

I think the 3rd is really return processing. So,how can you get that inventory, in the warehouse, out of a box and into a [00:01:00] sellable condition again as quickly as possible because ultimately all these returns end up back in warehouses.

And if they sit in boxes in the corner for weeks or months on end before they can actually be processed, that doesn't enable you as a brand to manage that inventory effectively. So that's something like where two boxes comes in and where we really help support. But also you really just need to be focusing a lot on having a great 3PL.

or an in-house fulfillment team who can deal with those returns. And then the last is, resale and recommerce channels, right? In our dataset, depending on the brand, somewhere between about 70-95% or more of returns can be returned to stock and sold as new, right?

But if you're a brand, I think you really need to be thinking about what do you do with the remainder of that? Today, the most common thing that happens is things get recycled or disposed, but there's usually a lot of very good inventory in thatstream that can be monetized through a resale or e commerce channel.

I guess to recap, I think the real stack nowadays is, best of breed returns management and [00:02:00] experience provider, like a Loop, a Happy Returns, a Narvar, an Aftership, etc. Really thinking clearly about your parcel or consolidationfreight options. Third is leveraging a tool like Two Boxes in concert, with a great 3PL provider. And then the last is really exploring some of the new resale and recommerce channels, like those that are offered by Treat or Trove or Recurate or Arrive. There's a lot of great options out there.

I'll start with like apparel and footwear. I think we see really high return rates, like depending on the brand: 25-50% in some cases we've seen higher than 50% return rates which is wild to me. But you definitely see a lot of return activity in apparel and footwear. I think what's, what surprised me there is just the. the variability and how seriously certain brands take these returns. And the immaturity or maturity of their processes, right? We've met brands that do crazy amounts of [00:03:00] revenue and have really high return rates. And essentially before we met them, we're throwing a lot of their returns in the disposal pile, which is to me just wild.

The other ones that have been really interesting iswe're starting to serve a few 3PLs who have a lot of like cosmetics and what's been really interesting to me there is not their high return rates, but the volumes of returns can just be so high, right?

A cosmetic brand might only have a 5% return rate, but especially if it's like an influencer cosmetic brand, you might be seeing thousands of units of returns a day just because they're selling so much product. And it's really interesting to me to see that in our data, we're finding that folks are essentially just buying cosmetics, using them and sending them back because there's not a good check and balance in the warehouse, right?

And so that's been really interesting of, there are bad actors in this space who figure out the soft sideswhere there'sability to make money or get free stuff. And it spreads like wildfire. Which leads me to [00:04:00] the last one, which is home goods.

Especially things like cookware. I Again, not huge return rates, but we see really bad actors taking advantage of poor return processes. There's actually one cookware merchant that we've been working with for a while now.

We're really thankful to them. They gave us a huge opportunity, early in the company. And, we helped them a lot with, fraud, right? Where they had about a 5% return rate, but they sell a really high price point product. And people were figuring out that, Hey, you could buy a five piece cookware set and send backlike literally a brick or like a magazine, a stack of magazines in the box.

And,there wasn't a good way to get caught. And so now we're the fraud police for that brand. Andit's been really awesome to see the impact that we can have there.

So, um,we at Two Boxes tend to serve what we call the warehouse operator.

And in the majority of cases, it's the third party logistics provider or the 3PL. And so if [00:05:00] you're a brand that, sells apparel or footwear or accessoriesyou're probably not fulfilling your orders yourself. If you've gotten to a certain scale: You're using a 3PL. And there's tons of 3PLs out there.

And if you're the 3PL, you have this really interesting, what we call multi tenant problem, right? Which is: I might have 50 brands in my warehouse. All of those 50 brands haveselected a different returns technology provider. And me as the 3PL, I'm not actually integrated from a technology perspective with any of those.

And so great, the brands have spent all this time and money and they've optimized the return initiation process and the parcel process. And ultimately what ends up is if you go into warehouses that we serve there's 10's of thousands of units of inventory that are showing up every day. In boxes from all these different brands, right?

And now you have this task of how the heck do I sort through all that inventory? Know who it's from? What they're supposed to be returning? What [00:06:00] actually showed up? How do I know how to inspect it all against the brand standards? And how do I ultimately help that brand get that inventory back to stock as quickly as possible?

And that's really what we help solve, right?

So.we help 3PLs with labor management, with optimizing the efficiency and throughput of this process. And by ultimately helping their brands get a better experience of getting more inventory back to stock with, fewer kind of issues, headaches, right?

Um, on the brand facing side, in this process we capture a lot of information about that returned inventory that we can then surface to those brands to help them understand their returns in a much more comprehensive way than they've been able to before. So

I'll give you an example: in our data set, we see the 8-12% or so of returns are clearly abuse or fraud.Depending on the time of the year sometimes that spikes much higher especially in the around the holidays. But then we see very simple things like we were working, with, or we are still working, I should say [00:07:00] with a women's apparel brand. And the #1 reason that items were being donated and not returned to stock was because of deodorant marks on the inventory because people were trying it on, not liking it, putting it back in the box, sending it back.

Right. Um, we worked with their 3PL to institute a value added service workflow in Two Boxes, software of when somebody sees that there's a deodorant mark, prompt them to try to remove it with some like easy kind of spot cleaning solution. And that brand saw a huge spike in their return to stock rate. It's a great outcome for everybody involved: The 3PL made a little bit more money on every unit and the brand took a lot of stuff out like about 10% of their returns moved from the disposal pile to the resale pile which, is a big outcome for everybody.

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