How RFID Reduces Retail & e-Commerce Returns in Australia & New Zealand

In the fast-paced world of retail, particularly in the apparel sector, managing product returns efficiently is crucial for maintaining customer satisfaction and operational efficiency.

Introduction

With the rise of e-commerce, the challenge of handling returns has become even more pronounced. This case study explores how an apparel manufacturer leveraged RFID technology to tackle a high return rate, streamline operations, and enhance customer satisfaction.

Background: The Challenge of High Return Rates in Retail

Apparel fulfilment and return centres frequently grapple with challenges such as managing sudden surges in order volume, ensuring order accuracy to prevent customer complaints, and handling a high rate of product returns due to sizing, fit, or quality issues. These returns can be time-consuming and costly to process for resale.

To tackle these issues effectively, these centres often invest in automation, employ advanced inventory management systems, implement stringent quality control measures, optimise their supply chains, and adopt sustainable practices to meet evolving consumer expectations.

Business Challenge: Addressing a 40% Return Rate in Apparel E-commerce

An apparel manufacturer faced a substantial challenge with a staggering 40% return rate for their products. This high rate of product returns, a common issue in the apparel industry, posed significant problems. The returns handling process for potential resale proved time-consuming and costly. Additionally, the manufacturer grappled with the complexities of maintaining precise inventory levels, particularly for rapidly changing fashion items. The risk of overstocking or understocking loomed large, potentially resulting in substantial financial losses.

The company also strongly desired to bolster its e-commerce business. They recognised the need for operational transformation and labour-saving measures to thrive in the digital retail ecosystem. It was essential to evolve their traditional retail stores into modern distribution centres capable of directly shipping products to customers' homes. Addressing these multifaceted issues was imperative to enhance competitiveness and overall operational efficiency.

Solution: Implementing RFID Technology to Streamline Returns and Inventory Management

SATO transformed the way the customer did business with a smart RFID solution. They introduced a high-tech conveyor belt system that scanned batches of RFID-tagged items upon arrival, eliminating the slow unpacking and manual checks. This innovation significantly sped up the process and improved accuracy. They also made data integration seamless, merging item-level information with carton barcodes, allowing for batch items to be identified, making the process smoother.

SATO also tackled inventory management by introducing a cart-mounted RFID reader, eliminating manual counts and saving time. Plus, there was no need for pricey RF interference shielding. Finally, SATO's RFID conveyor belt system for outgoing goods ensured orders were spot-on, reducing returns and complaints about missing or wrong items.

Results: Enhanced Efficiency and Reduced Return Rates

• Automated Receiving Inspection: The RFID system automated the inspection process, reducing the time and labour required for manual checks.
• Speed Up Stocktaking: Inventory counts became faster and more accurate, allowing for real-time inventory management.
• Improve Order Fulfilment Accuracy: Order fulfilment accuracy improved significantly, leading to a reduction in returns and customer complaints.

Conclusion: The Transformative Impact of RFID on ANZ Retail

SATO's implementation of RFID technology has revolutionised the apparel manufacturer's operations. By addressing the high return rate and improving inventory management and order accuracy, the company has enhanced its competitiveness in the e-commerce landscape. This case study highlights the transformative potential of RFID technology in the retail sector, offering valuable insights for other businesses facing similar challenges.

A study from the ECR Retail Loss Group in Europe found that, for the average e-commerce business, improving the rate of returns by only five percent can add more than two percent to the net profit of that company. For some companies, that will be the difference between carrying on and closing. ⁶

Mark Presnell
Convergence

Sources: ¹ NZ Post 2023, 2024, ² PwC NZ, ³ AUS Post 2024, ⁴ Australian Bureau of Statistics, ⁵ Stats NZ, ⁶ NZ Business,