IKEA Looks to Optoro to Minimize Online Return Waste

Need to Know

• Currently active in 50 physical US locations, Ikea plans to integrate AI platform Optoro into its e-commerce return process.
• The Optoro system, which integrates into retail software and point-of-sale systems, allows associates to enter product information and condition upon its return. The system then uses machine-learning algorithms to predict the new selling price and its optimal re-selling channel. 
• Returns can also be donated to charity if Optoro deems the difference between resale cost and repackaging to be too small.
• According to Ikea, approximately one out of every 10 items purchased at the flat-packed superstore is returned, and 15% of those returned items are discarded as waste. 
• Ikea recently announced a $220 million investment into its climate positive strategy, focusing on green energy and reducing the general impact of business on the environment.

Analysis 

Ikea’s digital strategy has helped the retailer grow its online sales by 50%, but with the high return rate of online purchases and the large environmental cost associated with them, the furniture giant is looking to improve its digital reverse supply chain strategy by working with Optoro. 

In December, the retailer announced its partnership with Optoro and deployed the logistics software in 50 of its 51 physical US locations. After seeing benefits, the retailer now looks to roll it out for its online US returns. 

According to Ikea, approximately one out of every 10 items purchased at Ikea are returned, and 15% of said returned items are discarded as waste. Products purchased online are nearly three times more likely than those bought in-store to be returned. 

As part of the retailer’s climate positive strategy, Ikea hopes that Optoro can improve its reverse supply chain process and eliminate returned-product waste entirely within the next decade. 

“By 2030, our ambition is to become climate positive and regenerate resources while growing the IKEA business,” said Selwyn Crittendon, IKEA’s US business development manager. “By working with Optoro, we are using the system to help us minimize any waste from our products or our return flow. That will help us [achieve] 100% circularity and zero waste.”

Through machine learning algorithms, Optoro’s platform not only helps store associates predict the appropriate channel for returned furniture to be sold on, but it can also suggest donating an item to a charitable organization if it makes financial sense for the business to do so.

With Canadians alone returning $46 billion worth of goods every year, any steps to prevent items from ending up in the landfill are steps in the right direction.