Last month UPS announced it was creating a strategic alliance with third-party logistics provider Optoro, which included an undisclosed investment in the company. The intent was to create a one-stop shop for retailers and manufacturers to optimize the transportation and disposition of returns and excess inventory.
Multichannel Merchant recently caught up with Steve Brill, vice president for retail and global B2C for UPS, to dig a bit deeper into the rationale behind the agreement.
MCM: Why did UPS create a strategic alliance with Optoro?
Brill: Optoro is an excellent complement to UPS’s existing portfolio of retail services. According to the National Retail Federation, Americans returned more than $260 billion in merchandise last year. While UPS specializes in operational, logistics and transportation, Optoro specializes in the processing and disposition of returned merchandise and excess inventory.
MCM: How will UPS and Optoro each benefit from this new strategic alliance?
Brill: The alliance combines Optoro’s software platform, OptiTurn, and UPS’s operational and logistics expertise into a suite of reverse logistics solutions.
MCM: Why did UPS decide to invest in Optoro and not just partner with them?
Brill: The UPS Strategic Enterprise Fund (SEF) provides UPS with an eye on emerging technologies and business models to gain deeper knowledge and enable better business decisions.
MCM: Any additional details you can share about how the partnership will work and what each side will do?
Brill: UPS returns solutions include pre-printed and electronic labels for packages that can be dropped off at thousands of locations nationwide. The UPS Returns Exchange program offers a concierge-type service where UPS drivers bring the replacement products as part of the returns exchange. Optoro’s proprietary software leverages predictive analytics and dynamic pricing to optimize the proper channel such as return-to-stock, return-to-vendor, sell on the secondary market, donate, recycle or destroy.
MCM: What are the benefits for retailers?
Brill: UPS and Optoro’s relationship empowers retailers and manufacturers to maximize the recovery value of goods while reducing environmental waste. As online shopping continues to increase, the importance of a comprehensive reverse logistics portfolio has become even more critical to providing an exceptional consumer experience that meets business objectives.
MCM: How does this partnership address the growth of ecommerce returns and the difficulty in addressing the volume?
Brill: Forrester predicts ecommerce will grow 9.5% a year through 2018. So the importance of a comprehensive reverse logistics portfolio will become even more critical to retailers seeking to provide an exceptional consumer experience that meets business objectives.