How to Handle and Prevent eCommerce Returns in Food and Beverages

Introduction

Forecasting and predicting eCommerce product returns in the food and beverages industry is a tough nut to crack. Several issues contribute to the complexity of dealing with returns in this category.

Some common factors include damaged packaging, vague pricing, and undetermined or varied shelf-life. These restrict transparency in terms of information and accountability tracing.

Generally, logistical operations in this industry focus on the forward supply chain. These operations haul products from factories or farms to e-retailer warehouses, physical stores, or stock hubs.

But what happens once the goods arrive at the destination? The packaging material used in transportation and any unsold or damaged food is overlooked. And they contribute heavily to landfills around the globe.

It is paramount to serve safe and quality food to consumers without endangering their health and wellbeing or the environment. But reverse logistics are needed to make the unsold food viable, reuse packaging, and safely dispose of unsaleable products. 

eCommerce product returns in the food and beverages industry also involve the consumer’s experience post purchase. This occurs when they receive a faulty product and place a return request. However, this part of the returns operations is still nascent.

A consumer may purchase a faulty food or beverage product from an eCommerce portal, e-retailer or hyperlocal service provider. When this happens, they swiftly resolves any issues that crop up by offering a refund. 

However, the faulty product is never requested for return or analyzed for problem-solving. This is because the cost of returns would outweigh the product price. This means the hyperlocal service provider or e-tailer will suffer a more significant monetary loss.

Reasons that drive eCommerce product returns in the food and beverage industry

Various aspects trigger product returns in food and beverages. Removing recalled, out-of-code, discontinued, or damaged products from the supply chain is crucial.

The eCommerce retailer is the bearer of all stock-related issues and losses. All returns due to manufacturing errors are chalked up to the manufacturer. As a standard operating procedure, the retailer scans all unloaded goods to pass a quality check before going on the shelf.

1) Excess Stock

Surplus inventory is mainly used to refer to any stock almost at the end of its shelf life. Its possibility of selling is extremely poor. Excess food and beverages are mainly attributed to a lack of communication in the supply chain. It is also often a result of misjudged inventory requirements, and changes in consumer behavior. 

When e-retailers purchase stock for their shelves, the loss of any unsold inventory in the food and beverage category rests on their shoulders. However, over-enthusiastic manufacturers can also fall prey to over-estimating the demand for their products.

In the recent past, Boston Beer threw away millions of cases in excess stock of Truly hard seltzer owing to a slowdown in sales. The company confessed they overbought due to their aggressive strategy to capitalize on the short-lived demand. 

The reason for the excess stock could also be as simple as seasonal changes and surpluses affecting supply and demand. A primary concern is a lack of efficient storage. 

2) Cosmetic Reject

Not long ago, infamous stipulations by retailers resulted in some memorable brouhaha in the mid-2010s in the UK. They declined to stock fruit and vegetable that were wonky or ugly. Nearly 30% of otherwise good produce were rejected. 

Caught under fire, retailers soon rushed to remedy the situation. They did this by stocking and incentivizing shoppers to pick up wonky veg at discounts. Asda, Morrison’s, and Tesco price their wonky veg and fruit at least 30% cheaper than the standard alternatives.

3) Contaminated Stock

Food and beverage recalls are standard in the industry and only make it to the news if the level of danger is high. While the problem usually lies with the packaging, the issue might be the product’s contents.

In 2015, Blue Bell Creameries had to recall thirty million liters of ice cream when an outbreak of listeria hit their production facility. In 2016, Mars Chocolates recalled their candy bar across 55 countries due to a contamination incident.

Most recently, Abbott Nutrition had to recall their Similac baby formula after the death of an infant. This resulted in baby formula shortage all over the US.

Even an oversight in standard operation processes can cause returns. A company in Canada recalled over 1000 pounds of pork products because the federal authorities hadn’t inspected them.

Any shopper who has purchased recalled products is encouraged to return the product and ask for a refund.

The manufacturer takes the lead in expensive product recalls. They arrange to have their products taken off the shelves and returned to them, disposed or replaced.

However, not all recalls head to the dump. Depending on the nature of the recall, the manufacturer may rework the products into fertilizer, animal, or pet feed.

4) Inadequate Labelling

Several consumers are often confused regarding the labeling of dates on packaging. Such as ‘sell by,’ ‘expires by,’ and ‘best used by,’ whereas ‘use by’ and sell by’ are only the manufacturer’s suggestions.

They are not in any way regulated by the federal department. Research suggests that by standardizing food labeling, food waste could reduce by nearly 20%.

Most product recalls and returns in the food and beverage industry occur due to mislabeled packaging. The reason could be a simple but expensive and dangerous error. Such as the oversight in not declaring allergens such as peanuts, milk, almonds, or cashews on the packaging.

Causing over 30,000 ER trips annually, exported and imported products are the critical cause of undeclared allergens. Mustard and celery aren’t allergens in the US.

But regulatory agencies in Europe and Canada consider them warn-worthy. When manufacturers export their products, they need to declare a list of allergens - 11 for Canada, 14 for Europe, and 8 for the US.

Consumers can act against the manufacturer if they feel misled or misinformed by the product labeling.

5) Production Error

Coca-Cola recalled more than 7000 cases of Minute Maid in 8 states for the possibility of containing metal washers or bolts. A Cincinnati-based Lemonade company recalled products that were uninspected with unverifiable safety parameters.

A manufacturer of cookies recalled close to 2000 cases of plant-based cheese-flavored crackers. This was because a third-party co-packer had filled it with another company’s egg and milk-based animal crackers.

Human error accounts for more than 10% of food waste. Even manufacturers with strict protocols can face product issues resulting from production processes.

Fruits and vegetables can be contaminated while in water or handling. Operators may switch over products before the machines are properly cleaned. Undetected debris can enter the facility.

Pathogens and foreign objects can enter the food and beverage processing at any point in time and result in illnesses when consumed. Chemicals must also be isolated and stored to prevent contaminants from entering the product.

6) Trial Run

Heinz is famous for its bottles of bright red ketchup. However, Heinz sold a gobsmacking 25 million units of EZ Squirt between 2000 to 2006. The kid-friendly bottle was available in various colors from green to orange and even pink. But the line was discontinued when the bottles stopped moving from the shelves.

When brands approach e-retailers to stock trial runs of new products, the retailer may respond in two ways. Retailers can negotiate for a sales or return contract if it’s a new player in the field of food and beverages. In these cases, they do not need to risk investment while offering space for the brand to promote a product.

However, if a well-renowned brand rolls out a new product, retailers may have to agree to their terms to not miss out on the regular inventory that are provided for their store.

Factors that contribute to eCommerce product returns in the food and beverage industry

Many reasons drive eCommerce product returns in the food and beverage industry. They are usually a result of one of the four factors described below.

1) Packaging

Packaging is vital in minimizing eCommerce product returns, especially for food and beverage items. Poor packaging can contribute to damaged goods, spills, and leaks, which are common reasons for returns. By investing in high-quality packaging, businesses can help reduce the returns they receive.

Good packaging should protect items from damage and keep them fresh and secure. They should clearly indicate any special handling or storage requirements. When done right, packaging can be a crucial factor in ensuring customer satisfaction and minimizing returns.

2) Handling

In the food and beverage industry, eCommerce product returns can contribute to a significant loss of revenue. Several factors contribute to eCommerce product returns. But proper handling is among the most important.

When food and beverage products are not handled properly, they can become damaged, spoiled, or contaminated. This can result in a return and a loss of customer trust. Businesses in the food and beverage industry need to take steps to ensure that their products are properly handled throughout the eCommerce process.

By doing so, they can minimize the risk of eCommerce product returns and ensure that their customers remain satisfied.

3) Temperature-Controlled Transportation

Maintaining the quality of food and beverage products during the transportation is critical to minimizing returns in eCommerce. Returns contribute to a significant portion of product waste. This is often the result of products being damaged during transit.

Controlling food and beverages’ temperature during shipment helps maintain product quality and extend the shelf-life.

This is especially important for perishable items, as even a slight temperature change can impact the product’s quality. This, in turn, minimizes the number of products that are returned or wasted due to spoilage. 

Temperature-controlled transportation may cost more upfront. However, it can ultimately save businesses money by reducing the number of returns and spoiled products.

4) Warehousing

A significant contributing factor to returns is poor quality control during storage. For example, if temperature-sensitive items are not stored in a controlled environment, they can spoil before they reach the customer. This is where warehousing plays an essential role in minimizing returns. 

Products must be stored in the correct conditions and handled with care. In this way, warehouses can help minimize damage and ensure that products reach the customer in perfect condition. Warehouses also need to track inventory levels and take measures to prevent overstocking.

By doing this, they can help reduce the likelihood of products selling out or becoming unavailable. As a result, warehousing is a critical factor in minimizing food and beverage eCommerce returns.

Why is it important to understand eCommerce product returns in the food and beverage industry

1) Data to Implementation

Companies need to understand reverse logistics’s role in the supply chain. Too often, many companies are not measuring the effectiveness or efficiencies of their returns operations. At least, not with the same level of attention they employ for their forward logistics.

Consequently, they miss opportunities to reduce costs associated with eCommerce product returns. Or glean important data that could point to the existence of procedural lapses in the forward supply chain.

For example, manufacturers can use data collected from return operations to monitor and adjust production processes. This can reduce waste in the food and beverage industry.

In other sectors, return data can be utilized to improve forecasting accuracy and customer service levels. Information can be used to focus on identifying and mitigating the root cause of the issue. By understanding the value of reverse logistics, companies can optimize their operations and better serve their customers.

2) Centralized System

Data can provide eCommerce retailers and manufacturers with vital information pertaining to product returns. More specifically, data can help understand why one vendor’s merchandise has a higher return rate than others in the same category.

In addition, the data gathered can be used to implement policies and processes to minimize product returns in the future.

For instance, data can reveal if a particular food or beverage item has been repeatedly returned due to expiration date compliance issues. Then, the retailer could work with the vendor to improve shelf life or educate employees on product rotation procedures.

By gathering and analyzing data related to eCommerce product returns, retailers and manufacturers can make more informed decisions. This will ultimately help reduce the number of returns and improve profitability.

3) Opportunity Loss

Many businesses view product returns as a loss, but there is opportunity in eCommerce product returns. By repurposing returns and selling them as resale items, businesses can still recover some of the cost of the goods. 

This is especially true for food and beverage items, which often have a short shelf life. By removing the damaged items and repackaging the load, businesses can sell the remaining products for a profit. In addition, by selling product returns online, businesses can reach a wider audience and tap into a growing market.

4) Waste

Large quantities of food are lost or go to waste at every stage of the food supply chain, from harvest to retail to consumption. In fact, it is estimated that 20 percent of food is lost during harvesting.

Another 40 percent is lost at some point post-harvest. The remaining 40 percent is lost at the retail and consumer stage. This waste has several adverse environmental impacts.

They include greenhouse gas emissions from decomposing food in landfills. And also water and energy waste from growing, transporting, and storing food that is never eaten.

In addition to these environmental impacts, food waste is also a significant economic issue. It represents a loss of resources that could be used to feed people or generate income. 

Thankfully, many initiatives are underway to reduce food waste. This includes eCommerce product return programs that donate unsold food to charities or animal shelters. By reducing food waste at all stages of the supply chain, we can significantly impact hunger, climate change, and natural resource depletion.

Things to focus on in the reverse logistics of the food and beverage industry 

Ecommerce returns are a necessary part of doing business in the internet age. But they can be a real headache for companies in the food and beverage industry. 

1) Speed

Perishable items have a limited shelf life, so returning them to the supplier can be a race against the clock. That's why speed is such an important focus in the reverse logistics of the food and beverage industry. Companies need systems and processes to ensure that returned items are dealt with quickly and efficiently.

This often means working closely with suppliers and logistics providers to ensure that items are returned as quickly as possible. By focusing on speed, companies in the food and beverage industry can minimize the impact of ecommerce returns on their business.

Manufacturers can speed up the reverse logistics process. They can use technology to track and manage returns. They can also set up dedicated return centers, and work with retailers to streamline the ecommerce return process.

2) Flexibility

Due to the perishable nature of food, managing returns can be even more challenging for food and beverage companies.

However, being aware of the unique challenges of the food and beverage industry helps. By implementing a flexible return policy, companies can minimize the impact of ecommerce returns on their business. 

In the food and beverage industry, returns are often the result of damaged or expired products. In some cases, products may even need to be recalled. As a result, it is important for companies to have a return policy that is both flexible and responsive to these unique challenges.

Some companies have implemented policies that allow customers to return damaged or expired products for a full refund. Others have created separate return policies for recalled items. 

3) Sustainability

There are a number of reasons why sustainability is important in the food and beverage industry.

First, food waste is a major problem globally, with an estimated one-third of all food produced in landfills yearly.

Second, the packaging materials used in food and beverage products (e.g., plastic bottles and cans) are also a major source of pollution.

Finally, many food and beverage products contain potentially hazardous materials that must be disposed of properly to avoid contamination.

With the rise of ecommerce, the food and beverage industry has had to adapt its reverse logistics to deal with an influx of returns. In addition to the logistical challenges posed by returns, the food and beverage industry also has to consider the impact of returns on sustainability.

One key way to make returns more sustainable is to focus on reducing food waste. In many cases, returned food is still perfectly edible but cannot be sold due to cosmetic damage. By partnering with local food banks or other organizations, companies can ensure that returned food does not go to waste.

In addition, companies can work on reducing packaging waste by using more sustainable materials.

They can also redesign packaging to be more easily recyclable. By focusing on sustainability, the food and beverage industry can positively impact the environment while also improving its bottom line.

How can ClickPost help with your food and beverage returns?

A returns management solution provider, ClickPost can be easily integrated into your returns portal. But what can we help with?

At ClickPost, removing the stress from returns management is our goal. As a business in the food and beverage industry, you could be weighed down by a flood of returns.

You may not know how to process and monetize on them. Or even be unprepared to deal with such high volumes. Our automated processes can help you deal with them so you don’t break a sweat.

What do you do with unsold products? Disposal generally means cutting your losses and a quick resolution.

Our landfills are growing by the day. Food and beverages have the potential to leach into the ground and release harmful gases. Why do you have to throw away a perfectly good can that is dented? Or that batch of misshapen biscuits? Or a syrup with a malfunctioning nozzle?

With ClickPost, you can route these returns directly to animal shelters or charities. And what about products that are recalled? Based on the nature of the recall and product’s safety, they can be delivered to manufacturers who make animal feed. By doing this, you recoup some of your losses from returns.

With ClickPost, you can choose specialized carriers and destinations your returns will get delivered to. Based on reason for return, our software can automatically do the segregation on your behalf. It will also generate and print the required shipping labels and alert the selected shipper for pick-up.

You will also have visibility on all your returns no matter their destination or carrier from a single portal. This way, you know where your returns have reached or where they are stuck. At any point, you can intervene and change up the rules to suit your business better. Clickpost helps you handle your returns responsibly and rapidly.

Conclusion

There’s always an opportunity to reduce ecommerce returns. In the food and beverage industry, that means being proactive about reverse logistics and ensuring your products are of good quality.

Returns cost time and money, so anything you can do to minimize them is good for your business. Understanding consumer behavior and implementing strategies can help you seize a larger piece of the market. 

FAQ

1) What does the food and beverage industry consist of?

The food and beverage industry comprises all businesses dealing with processing, packaging, and distributing fresh, processed, and packaged food and beverages.

2) What are food and beverage products?

Food and beverage products include all types of products manufactured or processed, packed and labeled, by or for a business.