E-retailer Groupon Goods has installed new software at a fulfillment center to streamline the way it handles e-commerce returns.

Groupon Goods, the unit of Groupon that sells tangible goods rather than vouchers, used to liquidate returned items at a predetermined percentage of the product cost, says Andrew Bowerman, Groupon Goods’ vice president of logistics. Implementing reverse logistics software from Optoro Inc., a returns and excess inventory vendor, “allows for Groupon to return unopened items to stock for resale if possible,” he says.

“The software guides Groupon on the most optimal way to sell the item based on a product’s condition, demand for it in the marketplace and expected price, among other criteria. Many times this means selling the product at a higher recovery rate on Optoro’s online marketplace, Blinq.com,” Bowerman says.

Groupon started using Optoro’s OptiTurn software, which plugs into its warehouse inventory management system, about a year ago on a portion of its inventory and now uses it across the entire reverse logistics process, Groupon says.

If a customer returns a pair of earrings, for example, here’s what happens: When the earrings arrive at Groupon’s warehouse, a worker scans the product barcode with a handheld device. The earring product information pops up on the handheld device, and the worker is prompted to assess and mark the condition of the earrings, selecting from “new,” “open box,” “refurbished” or “used in good condition,” Optoro CEO Tobin Moore says.

The software then analyzes the earrings’ condition and other data, such as product information and market trends, to determine the most profitable channel for reselling the product. Possibilities include selling directly to consumers, reselling to wholesalers, returning to the vendor for repair, donating or recycling, Moore says. The designated channel appears on the screen of the handheld device screen, prompting the worker to place the earrings into an appropriately labeled bin. If the earrings are damaged, they’re sent back to the vendor for repair, donated or recycled. If they are in good condition and have a high resale value, they automatically post on several online marketplaces, including Amazon.com and eBay under the Blinq brand and on Optoro’s e-commerce site, Blinq.com, Moore says.

In addition to the software, “Groupon built new processes to receive customer returns at our Kentucky fulfillment center. This gave us the ability to more closely examine products, maximizing potential recoveries using the Optoro software,” Bowerman says. The new processes involved Groupon reconfiguring an area of its warehouse that hadn’t been used to accept returns and adding physical sorting spaces and information technology to the space, and it took about six months to implement the software and adjust the returns handling process, according to Groupon and Optoro.

Bowerman did not disclose the cost of the reverse logistics software, but Optoro says it takes a percentage of a retailer’s revenue on returned items.

The return rate for Groupon Goods, No. 30 in the Internet Retailer 2015 Top 500 Guide, varies by category, but the overall rate is in line with industry standards, which is in the mid-single digits, Bowerman says. The online-only retailer had 2014 web sales of $1.56 billion, according to Top500Guide.com data.

Items returned to online retailers often wind up being shipped multiple times, losing value and generating waste, before reaching an end consumer, according to Optoro. “The use of Optoro’s technology is increasing value for our clients, connecting consumers to deals online and helping the environment by keeping high quality goods out of landfills,” Moore says.

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