How Optoro's Reverse Logistics Platform Is Helping Groupon Manage Returns and Reduce Waste
Inventory management is a huge, ongoing challenge for retail businesses the world over - especially when it comes to returns. With so many returned products ending up in landfills as waste, ecommerce marketplace Groupon formed a partnership with reverse logistics tech firm Optoro to boost its sustainability and keep returned and excess inventory out of the trash.
The Returns Supply Chain
In the United States, roughly 10% of all purchased consumer goods are returned - a figure which equates to roughly 3.5 billion products per year. The really shocking fact, however, is that a significant proportion of these returns are not considered fit for resale and end up in a landfill with the rest of society's refuse. Not only does this carry with it a significant ecological impact, it also costs businesses millions of dollars in revenue every year.
It's this worrying statistic which led Groupon to double-down on cutting the volume of product waste it was generating, along with associated carbon emissions and revenue loss. To this end, Groupon enlisted the help of reverse logistics technology startup, Optoro.
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Before this partnership, Groupon had been moving all its returned and overstocked products through liquidators. This has been a common practice in the retail industry for many years, but it's a slow, complicated, inefficient, and costly process. Liquidating returned and overstocked items typically involves multiple shipments spread out over several months before products ever reach a customer.
Optoro's innovative reverse logistics platform works by offering a way for retail companies to route their returned products to the next best home. This home could be another store in the same chain, a different business, an individual, or a charitable organization. This has the effect of keeping as many items out of landfill sites as possible and opens up new revenue streams from products which would otherwise have to be written off as waste.
The main driving force behind the platform is Optoro's Smart Disposition Engine. The software uses a combination of artificial intelligence, proprietary algorithms, and mobile technology to determine which channel will yield the highest value for a product by taking into consideration the predicted selling price and shipping costs for the item to reach the proposed destination.
Goods are sorted by condition (for example, "new sealed" or "used in good condition") - information which is then used to recommend the most appropriate destination for each item using real-time market data matches.
The platform also utilizes enterprise data and machine learning to improve its AI capabilities as it goes along - meaning that the longer the platform is employed, the more intelligent its recommendations become. The Smart Disposition Engine can be applied to any element of the reverse supply chain, including customer service, distribution centers, and back-room/warehouse.
"Using data and analytics, we are able to quickly route returned inventory to its next best home, whether that is an individual, charity, or business," said Optoro Co-Founder and CEO, Tobin Moore. "All of our programs have helped our retail partners reduce environmental waste by shifting products out of landfills and into the secondary market, and by reducing the number of times items are shipped."
With the assistance of Optoro, Groupon was able to decrease waste in its supply chain by 60%, transportation fuel use by 30%, and carbon emissions by 27% - all within a six-month period.
Returns and their associated waste are a huge problem for retail businesses and the environment. Groupon's partnership with Optoro ensures that the company's supply chain waste is kept to a minimum, benefitting not only the company's bottom line but boosting its green credentials as well.
"At Groupon, we are always looking for innovative partners that will help us become a more sustainable, profitable, and community-oriented business," said Groupon Vice President of Logistics, Andrew Bowerman. "The Optoro solution enables us to do all three by reducing waste and carbon emissions in the supply chain, increasing recovery, and providing consumers with great deals."
Reverse logistics solutions are set to be a hot topic at Consumer Returns 2018 this October at the Sheraton Grand Nashville, TN, where Optoro will be hosting a private lunch for attendees.
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