Building a reverse logistics strategy

With the continued growth of e-commerce, it is becoming increasingly important to have a strategy in place for returns. Improperly handled returns can cost companies thousands of dollars. The efficiency of your reverse logistics strategy is not the only factor that must be in place; your return policies and the customer service that follows are equally important.

Let's look at the facts: 

• Consumers returned $428 billion in 2020, which is over 10% of total retail sales for that year. (National Retail Federation)

• The estimated cost of returns in 2020 amounted to $101 billion. (National Retail Federation)

• One-quarter of all consumers return between 5% and 15% of items purchased online. (Shopify)

• When reviewing shoppers aged 18 to 80, free shipping takes the cake for the #1 thing consumers look for when purchasing online at 96%, while free returns aren't far behind at 79%. Additionally, 88% of consumers report making returns at least "occasionally." (Power Reviews)

So, what does that all mean? Consumers take advantage of free returns. Since returns are integral to your supply chain and strategy, it is imperative that you account for them appropriately. 

There are a few things you can do if your business is experiencing higher than average returns. First and foremost, determine which products are being returned and why. In some cases, higher than average returns can occur as a result of a product becoming defunct or not meeting customer expectations. Your return increase can be solved in an easy manner if there is an obvious answer. You might find it helpful to review your historical return percentage if you are still experiencing issues. In the event that the percentage remains constant, your business is most likely experiencing a fundamental problem.

Optimize Technology

Still experiencing high returns? It could mean that your product market calls for consumers to touch, feel, try on, and test your products before purchasing. In a 2021 Raydiant survey, they found that 46% of those surveyed said they would rather shop in person rather than online. According to the same survey, 33% of respondents preferred to shop in physical stores because of the ability to touch and feel the products. E-commerce companies are combating this by offering a variety of technology-forward tools such as new Artificial Intelligence and Augmented Reality technology, social commerce, live stream shopping, and more, to give the benefits of in-person shopping to the online consumer. 

Have Options

Managing reverse logistics can be very challenging and can result in the customer never shopping with your company again. 59% of consumers have reported to stop shopping with a company after just one dissatisfying customer service experience. A surefire way to make a return a positive experience is to be transparent about your return policy, follow through with your commitments, have an easy-to-print return label process, and make it easy and simplified for customers to return the product(s). When it comes to customer satisfaction, Amazon, for example, has simplified the return process considerably. The company offers a variety of ways to make returns easier, including convenient return locations, package lockers, multiple carrier partners, and simple-to-print labels for all customers who desire a different return experience.

Leverage Supply Chain Solutions

The best advice we have for all companies struggling with returns is to leverage software and solutions built to streamline your back-of-house processes. Reverse logistics is made easier by having a robust technology stack with integrated tools such as an ERP, Order Management System, and even a Shipping Solution, like ShipWise. These integrations connect to your selling platform or marketplace to pull orders, manage deliveries, and keep track of your inventory in real-time. They can also help keep track of when returns are coming back to your warehouse. With ShipWise, sellers can print a return label that you can place directly in an outgoing delivery package. If the return label does not get used or scanned, you will not be charged for the return label. It's an easy and efficient way to make sure the returns arrive at the right place and this way your company can keep tabs on the delivery. 

However you manage your reverse logistics, make sure you are working smarter, not harder and at the end of the day, listen to your customers!