An Industry Stuck in Reverse

And that's a good thing, logistically speaking.

The alarming numbers come from Jupiter Media Matrix: Online buyers will return 90 million items worth $5.8 billion in 2005.

Enter reverse logistics, the science of handling returned merchandise. Jupiter asserts that retailers must improve their "entire reverse logistics systems" to recoup the cost of returned items.

Logistics providers, not surprisingly, are ready to offer their services. Earlier this month, Airborne Logistics Services and ReturnBuy, which manage product returns and disposition, teamed to provide a reverse logistics service for the parcel industry.

Under the deal, Airborne provides core fulfillment and transportation services, while ReturnBuy manages product inspection and resale. ReturnBuy evaluates product returns and then sells the merchandise through a number of channels.

Some distributors, however, also are pushing into reverse logistics. IM-Logistics, the logistics arm of Ingram Micro, this month opened a 220,000 square-foot automated reverse logistics center in Harrisburg, Pa. The company spent about $6 million reverse engineering the former outbound distribution center into a reverse logistics facility, notes Michael Terrell, senior VP and general manager of IM-Logistics.

The channel, he says, "probably hasnt given the return part the focus that is needed as the technology turns have escalated," Terrell says. But apparently, theyll have to soon enough.