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Returns logistics in e-commerce

E-commerce is booming, but the rise in orders also brings with it an increase in returned items. It is these items, in particular, that present considerable challenges for suppliers to the consumer market. The toy manufacturers in the HABA Family of Companies opted for an automated solution from KION subsidiary Dematic to ensure that their returns are processed as quickly as possible. Ingenuity and bold decisions ensured that the project was a success – and that handling returns would be child’s play from now on.


For many, this will be a familiar image from childhood: Listening to the sound of a marble as it makes its way along a wooden track, the clicking as it drops to the next level, the thrill of seeing whether it can negotiate the bend without falling off, and – once it reaches the bottom – the irrepressible urge to drop it at the top of the marble run again. This is the type of playing experience that the long-established HABA Family of Companies specializes in. For over 80 years, the company founded by the Habermaass family – and now run by the third generation of the family – has been dedicated to the most wonderful target group in the world: children and their families.

Over the decades, HABA’s portfolio has grown to include more than just its classic marble run toy. Today, the company offers families and institutions a range of high-quality products in the core areas of family life, games, education, exercise, clothing, and furniture and equipment. It brings together the well-known brands HABA, JAKO-O and Wehrfritz under its umbrella. In 1987, the family-owned company launched its first mail order business, Jako-O. The HABA Family of Companies now sells its products online under the HABA, JAKO-O-O, FIT-Z, Qiéro! and Wehrfritz brands, and has enjoyed growing success in recent decades.

In the toy business for over 80 years: HABA

Returns management proved to be a bottleneck

The volume of parcels handled at HABA headquarters in Bad Rodach in Franconia is considerable, with at least 700 shipments leaving the company’s distribution center every hour. Many customers order several alternatives and then send everything except their favorite back. This is the reason why the manual returns management process at the HABA Family of Companies reached its limits two years ago. Due to the large volume, it could often be days before the returns were checked, approved, and made available for resale. “Our returns management simply could not handle the pace of modern e-commerce,” says Torsten Kreußel, Head of Process Management, Production, and Logistics at HABA Group B.V. & Co.KG.

In response, two years ago the HABA Family of Companies began searching for an automated solution that would meet several requirements at once. Not only should it fit seamlessly into the limited space of the existing facility, which had evolved over time, but it should also be implemented without disrupting ongoing operations. Dematic was one of several companies to take part in the tender process, showcasing bold ideas and its exceptional experience in the field.

Ingenuity connects

The HABA Family of Companies looks back on a long history in Germany, as does Dematic. And by a handy coincidence, the companies’ paths had crossed before. In 1998, Dematic – or Demag, as its predecessor was known – installed an automated small parts warehouse for the company which is still in use in Bad Rodach today. The special feature of this miniload warehouse was that it was the first test run for a new Dematic system that worked entirely without trays, i.e. a crane moved the goods to the upper shelves without the need for a stabilizing tray under the boxes. “Even back then, the HABA Family of Companies trusted us to implement new technology for the first time,” says Winnie Ahrens, Senior Sales Manager at Dematic, who also supervised the current project at the toy specialist.

During the tender process for the returns management solution, Dematic impressed with a pouch sorting system installed beneath the ceiling. “We were immediately taken by the idea of utilizing the unused space above our racks for a flexible pouch sorting system,” Kreußel says. Implementing the idea turned out to be a real challenge, as Ahrens explains: “Installing the system was rather tricky due to the age of the building and its existing structures, but our team excelled itself and managed to fit everything in through the proverbial eye of a needle.” The resulting system of overhead rails is hugely impressive as it winds its way through the distribution center like a huge marble run.

Dematic's pouch sorting system convinced HABA

Tackling obstacles head on

To save space, the goods transport system uses pouches suspended from rollers. A wide range of goods with a maximum weight of three kilograms can be transported, sorted, and sequenced in the pouches, which are filled automatically. A conveyor belt then connects them directly to the workstations for manual returns processing on the ground floor. “The system can fill up to 1,200 pouches an hour with a single package each, which can be identified via an RFID tag or a barcode. The item ID and the pouch ID are then married, allowing us to see where each article is located in the system at any time,” Ahrens explains. A steep-belt conveyor then transports the pouches up to the busy pouch warehouse on the second floor. It was this steep-belt conveyor that scored extra points for Dematic: “No competitor was able to build a conveyor as steep as ours. Their solutions mainly involved running along the outside of the building. This would have involved additional building work for the HABA Family of Companies,” she adds. But Dematic was aiming for the top and found a way to easily achieve this.

Steep conveying for high demands

There are 18 buffer carousels on the upper floor, each 128 meters long and on two levels, one above the other, which can hold almost 40,000 bags. Here, the goods circulate until they are added to a new order. Via the pouch collector, a sorting area with 17 parallel rows, up to 2,000 items per hour can be unloaded for new orders and forwarded to the repacking stations where they are prepared for shipment. It is at this point that Dematic introduced a technological innovation in Bad Rodach: For the first time, pouches can be unloaded automatically. “Around 20 years after Demag created its small parts warehouse, the HABA Family of Companies has once again placed its trust in us and is joining us in taking a bold step forward,” Ahrens says. The unloaded pouches are automatically closed again and return via a conveyor shaft down to the ground floor, where they circulate in the empty pouch area until their next deployment. The system works smoothly, as Kreußel confirms: “It used to take several days before an item was available for sale again. With the pouch sorting system, it now takes less than an hour. Not only does this reduce the amount of time and resources tied up with sorting the goods back into the shelves, it also saves us money. Customer satisfaction is also higher thanks to the faster delivery times.”

Always room for improvement

The toy manufacturers and the automation specialists at Dematic have one thing in common: Every system must retain some room for new ideas. Thanks to its modular construction, the pouch sorting system can be expanded as flexibly as a HABA marble run can. The HABA Family of Companies is now prepared for the ever-growing demands of e-commerce, and in Dematic has a strong partner at its side.