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As the $5.7 trillion e-commerce industry continues to grow, top shippers are searching for new ways to stand out from the competition. Increasingly, they are turning to the efficiency of return as a way to woo customers. Before ordering online, people want to know they’ll be able to return an item and face as little hassle as possible. This is especially important when ordering something without seeing or touching it in person.
Return processes and procedures are important to customers. People return products they ordered online more than ones they bought in a store, with a return rate of at least 30 percent online compared to 8.89 percent in-store. Also, 79 percent of consumers surveyed expressed the desire for free return shipping, and the majority (92 percent) stated they would purchase again if the return process of a company were easy.
Companies can learn a lot about how to satisfy customers by paying attention to these statistics. With this demand in mind, shippers are searching for new strategies to refine their reverse logistics operations to streamline returns. What is reverse logistics, and why is it so costly for shippers? This article gives the reverse logistics definition and shows shippers how to make the reverse logistics process more efficient, thus saving money and better satisfying consumers.
Reverse logistics involves moving goods from what would be their final destination, with the purpose of either capturing the value of the items or properly disposing of them. This process varies on the needs of each shipment and may include:
While it may seem obvious to carry out reverse logistics, this process can be costly for shippers. Also, managing the reverse logistics process can be complex. The volume of returns fluctuates throughout the year, making it difficult to plan for this part of business operations. At times, especially during busy shopping seasons, the volume of returns becomes significant. This often happens on top of the high volume of regular sales, requiring the need to manage both at once. High return volume raises inventory cost and reduces Gross Margin Return on Investment (GMROI).
Overall, reverse logistics is a wholly expensive process for shippers to undertake. Nonetheless, they still need to carry out this process. The companies that master returns come out ahead in many ways, as they’re meeting or exceeding customer expectations, managing operations better, and streamlining costs wherever possible. Since reverse logistics is expensive, shippers are searching for ways to lower the cost of their reverse logistics operations. Fortunately, there are methods available to shippers to achieve a more streamlined reverse logistics management process. The key is to turn to the Five R’s.
Following the concept of the Five R’s can help shippers have better control over reverse logistics processes. The Five R’s include: recalls, recycling, repackaging, repairs, and returns. Let’s take a closer look at each one.
A product may be recalled because it has a problem that could make it dangerous or subject to regulations or other requirements. In this case, the company needs the customer to return the product as a recall.
In turn, the shipper needs to have a logistics process for recalls that is separate from other types of returns, and it’s important to communicate effectively with consumers. Processes should be inplace for receiving the product and then following through with replacing, reselling, or reclaiming the product or the specific parts involved. If possible, the shipper should try to create trust through the recall process.
Recycling is another option when a shipper receives returns. There may be third-party companies that a shipper can use to recycle items instead of sending them to a landfill. There should be a process to check whether items can be recycled. In some cases, disposal is the only option.
Sometimes, the shipper can repackage returned items and resell them. People most often return products because they are unwanted, rather than the product having a problem. This means the product is in good shape and can be repackaged and sold.
In these cases, there should be a process for quality control. . Then, they can have a process for repackaging and distributing the item..
A returned product might be eligible for repair, refurbish, or remanufacture. This is a more sustainable option for shippers over disposal of the product. Products with minor problems may have further use after repairs. A shipper can then resell the repaired product in like-new or refurbished condition.
The creation of a process that allows taking in returns and then repairing or refurbishing them is needed. Without a good strategy, the repair process can become too inefficient and costly and thus not worth it in the long run.
Easy returns matters to consumers, and these are generally the first step that takes place in the process. Customers return a product, perhaps because it is damaged, unwanted, or different from what they expected. There are many reasons for a return, yet it still becomes something the shipper then has to plan for. Nonetheless, the reason may impact the next steps, as the shippermay find different uses for returned products depending on whether they are still in good condition or damaged.
For handling returns, a shipperneeds a good process to receive, inspect, and perhaps test the products. They need a strategy for return material authorization (RMA) verification and tracking systems. In some cases, the shipper may separate the processes of returning and repairing.
Overall, it makes sense for shippers to follow the five R’s and have a good process for each one. However, many shippers are likely utilizing manual methods that are outdated and ineffective. Manual processes like entering data by hand slow down increasingly vital reverse logistics processes and, thus, entire business operations. Getting on board with technology in the industry is the way to move forward. Software makes it possible to carry out the five R’s and full reverse logistics management much more efficiently and effectively.
Reverse logistics software gives shippers an efficient way to optimize their reverse logistics operations. It provides efficient tracking, tracing, and reporting of returns, repairs, and other inventory-related activities.
Reverse logistics software offers many important benefits to this process. The software:
Reverse logistics help satisfy customers and provide responsibility for the shipper’s products. Nonetheless, this process tends to be unprofitable, inefficient, and untimely. It often causes more problems than it solves. That’s why shippers look for solutions to help improve reverse logistics processes.
Through a partnership with Intelligent Audit, shippers can access a broad range of visibility tools to optimize their return logistics operations. They gain the benefits of these tools:
Better management of reverse logistics is within your reach. Start a conversation with Intelligent Audit today.
Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.
