{"id":116366,"date":"2025-02-17T11:07:25","date_gmt":"2025-02-17T16:07:25","guid":{"rendered":"https:\/\/envistacorp.techyscouts.dev\/?p=116366"},"modified":"2025-02-18T12:34:04","modified_gmt":"2025-02-18T17:34:04","slug":"from-returns-to-revenue-leveraging-ai-to-increase-inventory-profitability","status":"publish","type":"post","link":"https:\/\/envistacorp.techyscouts.dev\/en-au\/2025\/02\/17\/from-returns-to-revenue-leveraging-ai-to-increase-inventory-profitability\/","title":{"rendered":"From Returns to Revenue: Leveraging AI to Increase Inventory Profitability"},"content":{"rendered":"Reading Time: <\/span> 3<\/span> minutes<\/span><\/span>\n

Co-Author: ToolsGroup<\/p>\n\n\n\n

Returns are a fact of life for retailers. enVista\u2019s partner, ToolsGroup<\/a>, asserts that in the North American market, the relaxed return policies and high prevalence of ecommerce and in-store returns have led to skyrocketing return rates and put a great strain on size runs in industries like apparel and footwear. NRF support this claim with its findings in a study showing that 16.3 percent of all purchases were returned in 2024, equating to $890B in returns<\/a>.\u00a0\u00a0<\/p>\n\n\n\n

Returns are not going away anytime soon, which means that retailers will need to find a way to rebalance their inventory after a return to maintain optimal levels and maximize profitability.  <\/p>\n\n\n\n

The Current State of Returns <\/h2>\n\n\n\n

The current story of a return goes something like this:  <\/p>\n\n\n\n

The Customer<\/strong> \u2013 A customer visits a retailer\u2019s ecommerce website to buy a pair of jeans. To increase the likelihood of receiving a size that fits without the inconvenience of visiting the store, the customer will order the size they anticipate fitting, plus one size up and one size down. The customer then tries on the jeans at home, picks the one they want and returns the others for a refund.  <\/p>\n\n\n\n

The Retailer<\/strong> \u2013 Once the customer returns the unwanted items, the first hurdle is that there is no guarantee that those products, if shipped from store, will be returned to the store they shipped from. The second hurdle is that, even if returned to the correct store, that store now faces an out-of-balance size run and two bonus sizes that don\u2019t fit in. When this happens, the returned items are often sent to the back room to either be distributed to an outlet store or a liquidator. The question remains: how does the retailer make back its money and rebalance its inventory after this event? <\/p>\n\n\n\n

Rebalancing Inventory for Profitability <\/h2>\n\n\n\n

For retailers, the grass is<\/em> greener on the other side of the commonplace returns process. While AI-powered inventory management tools are introducing themselves as the way of the future for profitably managing returns, many organisations may not have the funds or resources to purchase the software and navigate a complex implementation. This is where AI as a Service comes in. Retailers can leverage an AI software provider in addition to a third-party consultant to reap the benefits of the AI as a service, without a costly implementation. <\/p>\n\n\n\n

There are many scenarios when AI-enabled inventory rebalancing can optimise a retailer\u2019s inventory for increased profitability. The two main groups of scenarios involve either a time-phased approach or an event-based approach.  <\/p>\n\n\n\n

Event-Based Approach <\/h2>\n\n\n\n

An event-based approach means rebalancing your inventory before or after a major event. Major events could be: <\/p>\n\n\n\n