- by Best Inc.
- August 1, 2020
How is your year looking as a business owner? When billions of dollars are generated in total sales, retailers can be ecstatic. The more sales – the better. However, the number of returns also increases as sales increase. Reverse logistics are involved in 28% of purchases. This can equate to billions of dollars, depending on sales, of course. Poor reverse logistics policies and execution can drive costs even higher than the already anticipated 20% to 65% goods cost for any given organization. Additionally, customer relationships can be damaged.
Yes, one of the biggest challenges facing e-commerce businesses could be reverse logistics. But why is that? Let's find out.
The Challenges of Reverse Logistics
Routinely speaking, an order is placed by your customer and their product is taken from storage. It is then packed up and shipped out in the forward logistics process. It's not as straightforward, however, when returning an order. The returned product must be dealt with by the distribution/warehouse center. In order for them to know what to do, questions must be answered. Does the item still have all of the tags on it? Is it in the original packaging? Is it still under warranty, and more? Before you know it, complications can derail what could be a smooth reverse logistics process.
Are returns a problem that is exclusive to e-commerce? For in-store purchases, about 9% of items are returned. With e-commerce orders, however, you can expect an average return of about 30%. What's more, that percentage is on an upward trend.
Making the entire process easier will benefit both the consumer and the business. In fact, when a retailer offered a return policy that was easy to understand, consumers were 81% more likely to make a purchase online, according to research. But how does one go about getting reverse logistics right?
Ease the Return Process for DC Associates
Making it easy for consumers to return goods is important (see the next subsection). However, your internal operations impact (i.e., DC associates) is important as well. How can this be improved? One great first step is a unified software solution for warehouse management and equipping staff members with technologies involving barcode scanning. Automation equipment is a major factor in reducing peak return season errors and alleviating employee stress.
Adopt A Return Policy That Is Generous
A huge, shortsighted mistake made by many retailers is requiring their customers to pay shipping returns and/or charging restocking fees on returned merchandise. This is a big turnoff to consumers! In fact, research has shown that, at the very least, a 74% decrease in sales can be realized regarding companies who make this a common practice. On the other hand, over two years, a sales increase of 58% to 357% was realized by companies that offered free returns.
Adjust Your Reverse Logistics Process For a More Holistic Approach
What will a holistic approach do? It can help unify the following:
- Preparation by warehouse operations for the resale of inventory.
- The receipt of excess and returns.
Several capabilities are required for a reverse supply chain to be holistic. This includes the following:
- End-to-end data visibility
- Automated remarketing
- Integrated first-touch disposition
- Purpose-built processing and receiving
Need Help With Reverse and/or Forward Logistics?
If you’re even marginally stressed out or confused by the ins and outs, and ups and downs of today's e-commerce, we want to be of assistance.
Contact Best Inc. for quotes and to find out how we can best support your e-commerce business.