Retailers are getting help from technology including AI in a busy returns season

Returns are now being processed a variety of ways to improve customer service and collect data, experts say

Retailers are taking steps to improve customer service for the millions of returns expected to be processed during the holiday season, and may even make some gains out of giving money or credit to customers.

Returns have become a part of the shopping process with the growth of e-commerce. But they can be expensive and cumbersome.

According to United Parcel Service Inc. UPS, +0.08% shoppers have returned more than one million packages daily throughout December. Volume should hit its peak on Jan. 3, National Returns Day, when UPS said it expects 1.4 million packages, a fifth consecutive record.

Read: Prime helps Amazon capture nearly half of all holiday e-commerce sales

“I think you’re going to see returns continue to grow as long as e-commerce grows,” said JC Ramey, chief executive of DeviceBits, which uses artificial technology (AI) to help companies provide better customer service. “It was the barrier to entry for online, the desire for touch and feel. The overall cost will continue to shrink as [retailers] seek out operational efficiencies.”

Technology is replacing humans and offsetting the cost of returns. Ramey estimates that the price tag for a customer service call is between $2 and $5. The cost is higher for in-store associates. The ability to reduce those costs can mean significant savings. Staffing at a large call center can reach 20,000 people, up from around 14,000 during other parts of the year.

“We’ve seen less staffing required this year—by 20% to 30%—so I think a lot of brands are using systems that aren’t human,” Ramey said.

He finds it encouraging that consumers are adopting these new technologies.

In some cases, shoppers don’t even know they’re not dealing with a human. Data from Narvar, a company focused on helping retailers provide a better customer experience, shows that only 10% of consumers know that the live chat or messenger app they are conversing with is not a person.

Other cost saving measures include providing multiple ways for shoppers to return items, whether through a shipping service or elsewhere, and offering an incentive to exchange an item rather than return it.

See: How ‘return bars’ at local malls could revolutionize online shopping

DeviceBits also collects data on why people are returning items. Many of their clients are in consumer electronics, so a chunk of their returns are tied to a customer’s inability to set up or use the item they’ve been given.

“The ability to drive that education early to the new users of these platforms—consumer electronics or otherwise—will drive some of the cost out,” he said.

Total U.S. returns are expected to come to $380 billion in 2017, according to numbers from The National Retail Federation provided by Optoro, a reverse logistics company that helps with returned and excess inventory.

Tobin Moore, chief executive of Optoro, says retailers are focused on customer experience, even on the return side.

Wal-Mart Stores Inc. WMT, -0.65% added Mobile Express Returns to the company’s app to speed up the process, reducing the time it takes to return an item to just 30 seconds, according to Walmart’s senior vice president of services and digital acceleration, Daniel Eckert.

But it’s not all about digital alternatives to human interaction. Kohl’s Corp. KSS, -0.82% partnered with Amazon.com Inc. AMZN, -1.40%  to offer free returns at select stores.

“[Retailers] recognize that the e-commerce model doesn’t work economically unless they’re well prepared for returns,” said Moore. “Consumers probably won’t notice it much but retailers are getting better at processing on the back-end, in a more effective manner.”

Over the past three months, Wal-Mart shares have risen 25.6%, Kohl’s shares are up 19.1%, and Amazon’s stock is up 24%. The S&P 500 index SPX, -0.52% is up nearly 7% for the last three months and the Dow Jones Industrial Average DJIA, -0.48%   is up 10.7% for the period.

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