EP 571:Rethinking Retail Return Logistics with Fillogic and Loop Returns
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A new episode every Monday morning brings you the latest from industry experts and thought leaders. And now, here's Kevin.

Hey guys, it's Kevin from The New Warehouse and I am here at Manifest 2025. I am in the Phil Logic booth and I'm going to be joined by Bill Thayer of Phil Logic and Chris Long, also known as CeeLo, I've learned too, from Loop Returns. And we're going to talk a little bit about Phil Logic. We're going to talk about Loop Returns. We're going to talk about the problem with retail logistics right now. We're also going to talk about...

their partnership and why that's helping to solve some of the challenges around retail logistics as well. So guys, thanks for having me here. Absolutely. Thanks. How's the race going with you? It's awesome. It's going great. It's good manifest so far. Really? Manifesting? Yep. Manifesting very well, I think. Very nicely. Not yet. Yeah. That's a big yeah. Not yet. Not yet. It's still early day one, so we still got some time to throw these guys out of here, but...

so it's good to see you guys definitely and good to hear that the show is going well for you now why don't we kick this off i guess for people that maybe are not familiar with loop returns or phil logic let's hear a little bit about what you guys do we're we're in the philologic group so let's let's start with philologic so right so bill go there i get to go once for first for once so what philogic does is we take underutilized spaces in retail centers

primarily shopping malls. What's great about shopping malls is they are closest to the consumer. So when you look at it from a logistics perspective, we deploy the technology and the operations to do things faster. We're building an interconnected ecosystem, e-commerce fulfillment, store fulfillment. And what I think we'll talk about today is returns, returns management, and why it's so important to get that right. Right. That

Right, definitely. And what about Loop Returns? What do you got? Yeah, Loop Returns. So we are the premier returns management solution on Shopify and branching out beyond returns every single day. I work with 4,000 of the best brands on Shopify and really we help them automate their returns process for both the consumer and the merchant.

hopefully all the way down to zero touch on both side and fully self-serve. And so, you know, where we work really closely together is obviously we're the yin and the yang, where the customer is going to start with us and we're going to help route all those packages to a partner like PhilLogic. They're then going to help the merchant process all those things and get them back into stock. So between the two of us, we represent the entire end-to-end chain of how to get a return from the point of origin on the consumer side all the way back to stock.

Interesting. Yeah. And I think it's so great that you said there, you know, with kind of minimal touch, right? Or no touch is the goal, right? Somebody's always got to touch something. Somebody. Yeah. We're humans. We need to touch something. That's right. Yeah, definitely. But so let's talk a little bit about, you know, kind of some of the challenges here, right? So why don't Bill kind of give us an idea of... Sure.

On the returns logistics side, what are some of the big challenges and hurdles right now in that space? I think the main issue that we face is when you look at the problem just in the industry, the problem with retail logistics is retail logistics. When you look at the networks that have been built in this country, it's built on free trade zones, forts, railheads, etc.

Those areas are curiously far away from consumers. And when you think about the return piece, you want to get close to the consumer. So we are looking at get it close to the consumers, less distance, less touch. And from our perspective, it becomes a major benefit on sales, you know, improving the sales and the turn piece. There's also a sustainability component to it as well. Less turns, less touch, less fuel. Big, big difference.

Yeah, absolutely. What are you seeing in space? Yeah, very similarly. I mean, part of how Loop started was, you know, you think about like we saw the images early on of, you know, nothing but emails and phone calls between consumers and merchants. So there's no technology in place. Boxes are going back to warehouses. And prior to things like PhilLogic and their network, you just have machines.

massive pallets of dented Amazon boxes with who knows what in them. And on the other side of the warehouse, you're looking at like robots and drones and all of this optimization. But on the reverse side, there's just this broken chain of cobbled together technologies, cobbled together operations. And I think that's kind of the opportunity from a reverse perspective that we're both trying to attack, you know, again, kind of us up front is the tip of the spear and then Phil logic.

trying to bring the operations side to it. But I mean, you know, even today you still think about that mental image of like the, the fulfillment side being this nice streamlined thing and the return side, it's still broken in most cases. I mean, it's, it's still a huge mess. So the, the space left to innovate in, in reverse logistics and returns, I think we're just getting started in a lot of ways. So when Chris talks about that, like you mentioned about the warehouses, everyone that's watching this, yeah,

and they're running a warehouse, under your mezzanine where the lights are turned off, those are your returns. You're not touching. Yep. The other piece of it, when you think about it, the technology that's been evolved and developed to this next level is what Loop has built. On the supply chain side of it, there's been no interest in building it, no interest from an infrastructure perspective to build out reverse logistics. Because think about it. It is...

Operators and retailers, everybody spent trillions of dollars building a forward network, but for the reverse network, everybody's on their own. And everyone's like, hey, on the logistics side, well, we need to build technology from the customer in. That's not true because on a post-purchase side, that infrastructure is already there. It's great. It's phenomenal. Latest, greatest technology. And what's great about us is the retailer had the integration built with the post-purchase provider.

we're plugged into people like Lube, turns the network on immediate. Low cost, low touch, very easy. Interesting. Yeah, I know. I think it's interesting you pointed out there what you were saying that

you know the the infrastructure was not really built for that reverse side right so talk to us a little bit about maybe the the evolution of the the market and and why returns has become a challenge and has you know stressed that infrastructure or at least or maybe the lack of infrastructure that was there yeah you want to take that one yeah sure i mean when you think about it prior to e-commerce and this is always the problem on the technology and logistics side

They built something, they built something else on top of it. And so you have this spaghetti of code and infrastructure. And unfortunately with that, it's very difficult to tear out. And, you know, when you look at somebody who's got updated, now WMS is very, very expensive. So when you look at all the growth during the pandemic,

Consumer behavior has changed forever. So, yes, even though the growth of e-commerce has slowed to pre-pandemic levels, the returns and expectations of what you need to see returns, it's not just returns. You have to be able to offer the whole panoply of solutions. Returns, resale, trade-ins, and one of the things that we think is really important is the recycling aspect of it. That's

trillions of dollars for the forward. The reverse is a very green field. But you've got to go on the technology end first, which, of course, is a bunch of... And I think we saw a lot of people...

avoid trying to solve that problem because it was so hard. They said, maybe this will go away, right? It was a little bit of like, if I just ignore this, if I just ignore returns long enough, maybe they'll go away. And to Bill's point, with the pandemic and the consumer behavior change, nope, it's table stakes. If you want to operate an e-commerce, you got to be able to manage returns. And the really savvy players

Really savvy brands, really savvy operators have said, hey, let's take this nascent opportunity that everyone else is looking at as a pain to mitigate away. Let's turn it into a revenue stream. Let's turn it into an opportunity. How do we take this thing and actually, you know, not only help drive some sustainability, but some operational efficiency? And if we're really doing a good job, we can drive some cash out of it. And so that's where I think brands that have leaned into like having an amazing returns process,

not just for the shopper, but like for their own operations teams. Those are the ones who are looking at it and like returns aren't bad. They're not evil anymore. It's a reverse sale. That's right. It's a reverse sale. Yeah, so we're just seeing...

we see that split, you know, we work with so many brands and, and there are the ones who are like still like they're getting into the return saying like, okay, well I need to make this pain go away. And then after a year or two, they go, oh man, I can really turn this into something that like actually moves my brand forward and really saves me money. And in a world where margin is everything right now, and they're getting squeezed from every side, you know, finding those dollars out of the returns program, whether it's on the tech and digital side, whether it's on the operations and inventory yield side, I mean,

I mean, you know, the brands who are doing, I think, really well right now are really optimizing the hell out of that spot in their workflow. Yeah. Yeah. And I think it's really interesting to point out there, too, because it's not just, you know, the product is returned and like that whole experience just dies at that point. Right. So I think what you said, there's another other touch point for the customer. Right. It's another interaction. It's another opportunity to satisfy that customer and maybe turn that into another future sale. Right. Right.

increase that lifetime value, which is super important. Yeah. And the way that we've gone about that, I think, is part of what's really important about our partnership is the only way you can do that is to move quickly with the technology, right? Bill talked a lot about the forward chain is...

It's legacy, and there's a lot of legacy technology in there. You can have all your robots on the forward. That's right, yeah. But if you don't have the technology to move quickly, like, you know, the ability to, like, get the return from the consumer, understand the disposition of it, understand whether it's good for resale, process it really quickly, update all the downstream systems really rapidly and make sure that the data connectivity is there.

you know, a lot of people just, they can't operate on it. And so the, having the agility, I think for our engineering teams to be able to like really quickly, continually iterate over how our solutions talk to each other has been a huge piece of like our strategy and something that we continue to lean into because the, the reverse chain is, is developing very quickly. And, you know, it's either a move fast or get left behind era, I think. I think there's sort of like, there's like this tech thing,

malaise where it's like, I got to put another piece of software in here. And what's great about like how our partnership has evolved, they already have all the hooks. They already have all the pipes coming in. It's like, okay, great. When we talk to brands and retailers, the usual feedback on return is like, Hey man, could you just take this away from me? And that's, we've said, Hey, no problem. Built the infrastructure. We tested, we've put millions of units through it. And it's very easy because you're taking something that brands and retailers are

don't want to touch. And if you're touching that return physically, closer to the point of return, like usually in zone two or within a day or two with the first drop off, you reduce damages, reduce fraud. I mean, all of the options, like we talk about, you know, reducing costs. It's not just cost. It's how much faster you turn the inventory. We turn it twice as fast. Oh, wow. Up to cost and a half. Yeah. When you look at that, you know, we sell to CFOs as much as we can. Yeah. Because we're like, hey, man,

You want to save some money? You want to improve your business and get a sustainability component? Why wouldn't you do it? Right. Yeah. It usually helps. I think, too, on the brand stakeholder side, you know, you think about the CFO is still king right now. They're the ones at the end of the day signing the paper. But the CTOs and the CIOs, they're really worried about interoperability, which, again, in so much of the supply chain has been brutally difficult for decades. Yeah.

And, you know, one of the things that I see from my perspective is you have 3PL and logistics providers who kind of think about things one of two ways. And I'd say the legacy way is to think about like their vertical stack of like, no, our tech works with this thing and this thing and this thing and this thing and whatever.

We care about making it work within there. And then you've got Phil Logic who thinks about their tech as a platform. They're trying to build things that are more of like, oh yeah, you can plug into us like this and you can plug into us like this. And for merchants and brands, what do they care about? They care about future-proofing this stuff. And somebody who's got a very rigid...

vertical sack of like, well, these are the technologies we work with and these are the integrations we have. They're having a lot of trouble because the brands are just fed up with it. Like they need speed, they need flexibility. And so, you know, finding, finding two platforms that, that think about their technology as a platform approach, it gives us a lot of flexibility. And, and I mean,

I think, too, allows for us to say, like, maybe there's a third party that sits in between the triangle. And we're both like, cool, sounds good. We've both got the APIs that make it so you can plug into that, maybe do some of the work on your side, some work on our side. And that's really what I think drives the speed that merchants ultimately care about because...

In today's age, the last thing they want is to be locked into a solution that has a two-year transition path and they can't get what they need out of their vendors and suppliers and operators. And, you know, it's just that model's not working anymore. Yeah. And that ability to turn things on, like, you know, once again, as retailers and brands are integrated with Loop, our integrations are pre-existing. There's no real implementation time cost. It's

It's a configuration. We can turn on millions of units in a couple of weeks. When you think in normal supply chain space, I mean, think about how long it takes people to open a building. Yeah.

Half a year, nine months. We open buildings in a couple of weeks. And from us, we don't even have to have all the infrastructure. We can turn on that integration with Loop, immediately reroute it to a building. Very simple because it's just how we look at tech from Loop always has done this. We've done this as a business because a lot of the legacy folks in the supply chain space, they talk to you seriously like EDI is a thing. It's not...

Bad. Flat files, CSVs, FTPs. When we have conversations with people, like, look, you know you need to use an API. You know you need to use webhooks. And that's just going to make it go quicker. And most people will kind of come to that stage. But it's kind of like our partnership. The problem that we're solving is so massive that we're going to partner with lots of other people, which is great. But

being tech forward and stuff has always made it easier for us because we work with others. I get customers come on, I sell them onto Loop and others, Loop sells it to us and others. It's an ecosystem. Yeah, absolutely. So very interesting. And I think that's such a great way to think about it too because if we think about

you know, our regular lives, right? Like not our enterprise business lives, right? You know, we get something like, say you bought a new phone, right? I'm not going to wait for nine months for that phone to start working and be implemented into my life. Be turned on. Yeah, I would be like, you know, I'm going to throw this phone out the window. So bringing that into, you know, the business side too, I mean, makes so much sense to be able to have that kind of quick turnaround and that simple to turn on solution and be able to

to get things moving because that's that's what you want at the end of the day um so now tell us tell us more about the the partnership here and kind of what what does that mean what does that entail and how does that work we'll be back after a quick break you don't want your employees to be idle so why would you want your robots to be idle zebra technologies is addressing idle robots by bringing their latest solution to the market which requires 30 fewer robots

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Yeah, I mean, I think one of the biggest things that is important from my side, again, is like, PhilLogic shows up like a technology partner, not as a logistics partner. And I think that's like, yeah, that's like... Our engineering team shows up. That's right. Yeah, yeah, yeah. Well, I mean, I should have said that very clearly. Not Bill, but Bill's engineering team, right? And so, you know, we've always said at Loop, we're like pixels, not parcels, right? And so that's why from a partnership perspective, we look for folks like PhilLogic. But even then, if they don't

if they don't show up and speak our language as like a pure technology company, a pure technology provider, and one that aggregates and integrates with, you know, hundreds of 3PLs, hundreds of carriers, like,

You know, there's just this very clear divide, again, between people who speak our language and those who we have to pull along and those who we have to bring along. And I think that just does so much, not only from like the actual partnership of the engineering and product level, but then from a go-to-market perspective, it just gives a lot of confidence. And that's when things really start to click, right, is, you know, I think you see a lot of go-to-market partnerships and there's a lot of excitement about those things, but then you

You can't make shared product changes together. You can't move fast and innovate together. And again, I think that's one of the things that we've done really well. They've done some incredible work in building out item grading and dispositioning capabilities. And that's a piece that, from our perspective, has been really important for us building our fraud and fraud management tools. And working with them on that feels like working with a tech company. Yeah.

And so, I mean, I think from my seat, that's what's really great about the partnership, you know, let alone all the opportunity we have on the go-to-market side. I don't know if you want to... No, true. I think when you talk about partnership is since we're speaking the same language, things that are challenges for them are challenges for us. Like, we'll have the issues when we onboard particular customers together. And what's always impacted Loop is they don't have a willing partner on the technology side on the other end to say, hey, we're at the end of a glass pipe on both sides.

There's something going wrong in that chain, and we're able to fix that. And usually it's pretty simple. It's like, oh, we've got to change this. We've got to deploy that. And it's really powerful when you see that turned on. And the customers are like, oh, hold on. This has been a problem for, like, we have a customer that was having blind receiving on 25% of their e-commerce returns. Oh, wow. It's half a percent. Yeah. And just because the engineering teams with Loop and Fullogic, they walked and they did a couple of tests.

And they fixed it. Yep. You know, I was like, well, it's magical. It's like, no, everyone's talking the same language. Right. They get along. Like, for example, we see things that are happening on the floor physically that are happening. We will run that up through our, you know, our loop partner. And we'll say, hey, here's this issue. Because most of the time we'll get a relationship that comes through loop to us. And we'll talk with loop about what have been the problems with that particular brand or retailer. And we'll do something to fix it. Yep. Say, great, we can handle this because there's a

physical tactile motion that you got to put into that process and that just makes everybody happy it's fast and we want to do more of these right i think there's i think there's cultural partnership in that too and that like you know again i think so much of supply chain you have folks who it's kind of like the operation first and the customer second so to speak like they're focused on their operation as like as like their primary concern and one of the things that i think

we haven't even talked about this, but a feeling I have is that like you guys are cut on the script. No, no, it's no, no, no. But you know, your logic is customer centric and they're, they're willing to say, yes, let's figure out how to do it. If that's what the merchant needs. And then, yeah, we'll find a way to streamline it. And I think Luke, we think about it very similarly. So not only are we speaking the same language in the tech perspective, but no one's precious about kind of their side of the thing versus our side. It's like, well, what does the merchant need? What's the retailer care about? How do you drive their outcomes? Because if you can't, if you

If you can't find a way to do that, then you both lose. Right. And I think that's just, you know, for some reason, it's still just a tough evolution for a lot of a lot of classic providers to come up with because it is hard to scale. It's hard to it's hard to do, but it's it's what brands are expecting. And again, even on our side, in terms of making sure the technology moves fast, that's what shoppers are expecting.

They're not okay with a returns process that looks and feels like it was from five years ago. So, you know, our partners have to move fast. We have to move fast because shoppers' expectations are through the roof. You know, and Amazon sets the stage and everyone else is trying to keep up. So I think it's a very fast-moving. The stairs turn process sucks. It's getting worse. Set it. I'll take it. You're in here first, right? That's right, yeah. So, well, let's talk about that a little bit because the consumer expectation, right, is certainly...

That's certainly something that has driven a lot of the changes in the way we need to act in the logistics warehousing fulfillment world, right? But where is the consumer behavior right now on the returns specter? I mean, are we...

Are we getting better as consumers or we're getting worse? We're definitely getting both. I mean, I think that what we're seeing is there's a huge shift towards like understanding what is a good returner, what is a bad returner. And again, the only way to really understand that picture is to have like an end-to-end data set, right?

Because we see a whole bunch of what's their shopper behavior with the buy? How do they go about like, you know, selecting establishing returns? Where are they dropping them off? Are they selecting low cost options? And then on your side, you see, did they send back a box of rocks, a can of tomato soup? Did they send it back in an A grade that's, you know, ready for first party restock?

How are they showing up from like an actual net profit perspective to the brand? And most brands don't know that today, right? They have no concept of like, they know how many orders somebody placed. They know maybe that they did a lot of returns, but like, did I make money or not on this customer is something that many brands still to this day can't figure out. And again, there are customers and shoppers, I should say consumers and shoppers who are

great returners. They always send stuff back in pristine condition. But we're also seeing fraud just ratchet up like crazy. I mean, people are absolutely gaming the system left and right. And it's something that, you know, we've released fraud management tools. The information grading and dispositioning piece is a core part of our algorithm that we're trying to get ahead of those things. But we're going to see an arms race with returns fraud that is not going to stop for the next...

10 years. I mean, it is just there. The same way consumer behavior has changed. That's right. The crooks have changed. That's right. Everybody's gotten smarter. And so what's really interesting is if we're not trying to block customers from shopping and shopping more, we're trying to give them better solutions to be able to say, okay, you want to drop it off? You want to mail it in? But that's consumer expectation. Unfortunately, the supply chain side

You know, most supply chain folks are extremely skeptical of technology because many organizations are like, hey, Ricky, CIO says you're going to put in this tech. It's going to be the best thing ever. And it wrecks their operations. It doesn't work. It's not a structure in downtime. Yeah, correct. Scary. And so that's a big, horrible point from our side is we don't want to give you more technology.

We want to give you more solution. People don't look at us as, oh, it's another piece of tech. It's a solution. Good. That's the difference. When you talk about sort of consumer behavior, the old term of omni-channel, customers don't think of channels. Why would we build networks that think of channels? Yeah. We have stuff that's going out and coming back. How it's going to do that?

customers that make that decision and they're going to vote with their wallet. So you better have everything available. That's right. You better have the data that supports the movement for it to say, like a couple years ago, it was like, hey, everybody wants next hour delivery. No, they don't. Grocery, yes. Everything else, I don't think somebody wants a box of cigarettes. Well, maybe a piece of cigarettes.

But when you think about that... Bad example. Bad example. Yeah. But when you think about it, that to me is sort of what's in the ha-ha moment on this. It's like, right, we have something that's interesting, easy, and it's already available. Like I've been telling the folks at the show, like, hey, we're building out some reverse logistics infrastructure. Like,

Why? Yeah. I mean, all the tools exist already. Like, don't try to recreate something that's not a problem. Yeah. Problem's been solved. It's just adoption. Yeah. Interesting. And I think, too, like, you know, maybe getting really nitty-gritty on your question of, like, are we getting better as consumers, too? Kind of going back to that, like...

I mean, the short answer probably is actually no. And the evidence there is like, we've seen brands from the last two years, like on average on loop, like a year or two years ago, we saw about 40% of brands charging fees on returns. That's up to like 60 to 70%, right? So the era of free returns is over. That's just gone. And it is that, that is fading by the day. And brands are, you know, the way I like to think about it, brands need to be able to put strategic friction,

into the returns process. They need it to be just fictitious enough that like there's, it's easy enough for their good consumers, but hard enough for their bad consumers that they can manage the loss of the bad consumers without really negatively impacting the good consumers. And that's again, where like, if you look at what we're aiming at for the rest of this year, it's like,

It's personalization. It's automation of like policy management. No brands don't want to have to figure out, well, how do I set up four different return policies? Yeah. We want to be able to do that in loop for you so that loop knows who your good customers are, knows who your good returners are. They're getting longer return windows, lower fees, your bad customers, your low profit customers, higher fees, shorter return windows, stricter policies, right? Because the brands need customers.

to be able to have their systems automatically manage their outcomes for them. And so even the like one-stop shop return policy, that's gone at the end of this year. And I think brands who, you know, are really forward thinking are thinking about personalization and post-purchase, not just in terms of, you know, recommendations and marketing personalization. They're thinking about like, how do my operations actually adjust based on the customer here? Like,

maybe my VIP customers are going to get routed to the pre-sort and their stuff's going to get triaged first. So they're going to get their refund back faster, right? Whereas somebody who's a bad customer, their box is going to sit for three days and they're going to have an extra three days on their refund. Like these are where the really progressive brands are going. And again, that's where it's going to take

an end-to-end technology stack where they can configure the policy the right way at the returns initiation. And that information and context flows all the way down right up until the point of restock. I mean, it takes kind of that level of connectivity, I think, to bring the shopper's expectation to the forefront and the brand's expectation to the forefront and solve for both. Yeah, because it's us.

All of those rules and stuff have already been set in front by Lou. But what's interesting with us, it gives us options that once we go through that dispositioning process, then it opens up the opportunity to say, great, is this a key item? Do we need to bring that inventory? Are we going to fulfill it from a location? Are we going to send it to a store? Are we going to send it back to their main distribution center? That is a tool that we provide to the brands and retailers and say, what is your goal? What do you want to do with that inventory? If it's an end-of-life item,

Send it back to that same distribution center? Or do you want to liquidate it through another platform, whether it's sustainability or in a B2B marketplace? The idea is just opening up. When you look at e-commerce, 30% in apparel returns, that 30% of inventory is sitting in a box in the old world for 40 days. Yes, it's sitting with us for 20 days to go back and forth. But imagine if you're able to unlock that and then instead of that apparel,

I wonder if I received it. They didn't send back to one distribution center. How about if you're sending all that to different places where we're kind of starting to talk about it? This is like a reverse OMS. Yep. OMS is really so good. They're very, very expensive, but there's really no true reverse or yes. Interesting. Interesting. Okay. All right. Sounds very good. And definitely a lot of great insights with you guys here today. And, uh,

I was going to ask you what the future is, but you just gave me a little taste, it sounds like. So you guys know the cadence already. 20 rehearsals paid off. Yeah. So really appreciate you guys having me over at your boot right here at Ice Manifest this year. If people want to learn more about Philogic, what's the best way to do that? Philogic.com, www.philogic.com. All right. And Loop Returns? LoopReturns.com. It's got all the information you need.

All right. Awesome. So I appreciate you guys joining me and having this conversation. So to learn more about Philogic and Loop Returns, head to their website and we'll see you on the next podcast. You've been listening to the New Warehouse Podcast with Kevin Lawton. Subscribe and check us out online at thenewwarehouse.com.

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