Reverse Logistics: Managing Volume, Velocity and Value of Returns / Technology Solutions / Last Modified: February 28, 2018
Image credit: Gustavo Frazao/Shutterstock

A well-executed reverse logistics plan can help your company get the most value in the least amount of time when dealing with customer returns.

Everything from mobile phones and gaming systems to medical supplies and automotive parts can be and frequently are returned. One thing is for certain: If you can sell it, someone out there will return it.

A smart, high-tech reverse logistics solution provides incredible value for companies that sell – and are forced to take back – high-value items with expensive components or high potential for refurbishment and resale. A well-executed plan will enable your company to get the most value in the least amount of time out of those mounting returns.

Reverse logistics is hardly new. It’s been around for years and has evolved as liberal return policies became a cost of doing business in the e-commerce age.

So, what’s making companies sit up and pay more attention to reverse logistics in 2018? 

As the Reverse Logistics Sustainability Council has noted:

  • The overall size of the secondary market is now greater than 3 percent of the U.S. GNP
  • 84.6 percent of U.S. firms utilize the secondary market in some way
  • 70 percent of firms view the secondary market as a competitive advantage 

Simply put, the velocity, volume and value of goods flowing throughout the overwhelmingly circular economy has increased astronomically over the past decade. Moreover, this is not just for high-value goods; fragmented B2C e-commerce and in-store returns are now a large part of the consumer experience.

The phenomenal pace of change is driving demand for more efficiency, innovation, transparency and automation across the supply chain. Massive e-tailers like Amazon and Alibaba continue to stand the reverse logistics paradigm on its head daily.

Consider the changes impacting reverse logistics trends:

  • Recommerce is becoming an increasingly attractive business model, employing software to determine the price of the goods and guaranteeing the sale of the products around a predetermined price.
  • Delivery and transportation modes or approaches must increasingly adjust to the demands of changing omni-channel delivery systems and strategies (whether these are global, national, regional, or even local or citywide) to address customer loyalty effectively.
  • Sustainability goals remain important for firms that must address environmental regulations or market their products to consumers who are concerned about used products entering the waste stream. Eventually, product manufacturers may bear legal cradle-to-grave product lifecycle responsibility. And, of course, with the constant shift in consumption globally, products with second lifecycles and secondary markets make sense from a revenue perspective.
  • Retail returns processing demands now reach far beyond dealing with previous seasonal or cyclical returns issues. Many retailers are simultaneously consolidating or closing brick-and-mortar stores while testing their omni-channel strategies and approaches. Many are still struggling to get it right.

Retail returns are now a big part of customer retention and loyalty. According to a 2017 Narvar report, approximately 12 percent of retailers' online sales are returned, on average. Further, the report notes, as shoppers buy more online, they return more; nearly half of shoppers surveyed returned an online purchase in the last year.

Stores know a positive returns experience can drive loyalty. The Narvar report adds "returners" are likely to be the best customers: 82 percent of returners were repeat shoppers and 95 percent of those satisfied with the returns process said they’ll purchase with the retailer again. A key report takeaway: "High value customers are also the most likely to utilize the returns process."

It seems that some of the same aspects that are changing forward logistics for retailers – same-day delivery and the shrinking map and time windows in which to deliver and omni-channel distribution – are also impacting reverse logistics and operations. The increase in parcel shipping and drop-shipping all profoundly impact operations and choices, too.

These are complex challenges. The reverse and returns conundrum needs to draw from rapidly evolving cross-industry best practices and approaches in technology, transparency and automation.

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