The peak shopping season is fast approaching with many retailers still figuring out how to welcome back customers within the constraints of our new normal since the pandemic. This year’s peak season will see very different trends and surges than previous, with the most notable being earlier than normal shopping volumes as customer worry further restrictions might be put in place this winter. Reverse logistics processes will be key to ensure profitability.

Planning for peak season early is of the utmost importance as well as looking at how to handle all the returns that unfortunately come with impulse buying while trying to find a good deal.

If you sell any type of goods online, reverse logistics is an important part of your business. Today, the global reverse logistics market size is growing in leaps and bounds. In 2021, it was valued at $840.7 billion and it is expected to expand at a compound annual growth rate of a whopping 12.4% from 2022 to 2028!

Reverse logistics is the process of returning goods to their places of origin, such as from the purchaser back to the supplier or manufacturer, and then forwarding it for servicing, refurbishing, or recycling.

According to Research and Markets, the rapid growth of the eCommerce sector is what has driven this increase in the volume of return and replacement items.

So what does this mean for you? If you don’t understand the most common reverse logistics challenges, you’ll risk an inefficient flow of goods, which can create monetary loss and customer dissatisfaction and ultimately damage your brand.

Here are today’s biggest challenges when it comes to efficient reverse logistics:

Warehouse design & space

Warehouses often have limited space to store and stage orders. The more returns you process, the more space you need. Reverse logistics require an average of up to 20% more space than forward logistics. In addition, about 400 million square feet will be needed over the next five years to manage the expected surge in demand to process online returns according to a report released in late 2020 by real estate company CBRE, Inc. The best way to tackle this challenge is to ensure your warehouse has a dedicated spot to store and process returns and a sorting system, regardless of the size of your business.

True costs of returning damaged goods

Reverse logistics are expensive. Costs such as transportation, processing, inspecting, redelivery, and customer support, can conservatively amount to 59% of the sale price of a $50 item. To reduce costs and increase profits, ensure your company has a well-rounded return policy and an effective inventory management system.

Fraud

Unfortunately, dishonest customers will seek to manipulate return logistics to get something for nothing. A well-thought-out return policy with restrictions, such as return cut-off dates, can help cut down on reverse logistics losses.

Customer satisfaction & demands 

Today’s savvy online consumers are demanding. They expect an efficient purchasing experience including an easy, cost-free return policy. To tackle this challenge and maintain customer loyalty, companies must understand consumers’ expectations and design a convenient, post-purchase experience.

Environmental considerations

Most responsible companies are seeking to reduce waste. Reverse logistics can create challenges for reducing your carbon footprint unless you work to incorporate sustainability. This can include green supply chain efforts such as zero waste packaging, repurposing returned items, and using environmentally friendly methods to dispose of the items that must be discarded.

Workflows & processes for returns

Effective reverse logistics is a complex process with several steps including processing and inspecting the return, repairing or recycling, and repackaging and sending it back to the consumer. Because there are so many actions, it can be difficult to track orders and keep products moving. Technology and holistic planning can help ensure a smooth reverse logistics flow and keep your customers happy.

 In Summary

A return can be a future sale. Consumers are known to change their minds, and today’s consumers believe that they’re entitled to do so. When they do return a product, whatever the reason, the ease of the return process and how they are treated have a huge impact on repeat sales.

Many retailers have recognised this reality and have adjusted their returns policies to be hassle free. Some retailers even encourage returns and have made return shipments as simple as possible. Customer and brand loyalty contribute directly to the top line, and data from customer returns can help inform this strategy.

A reverse logistics strategy for product returns is much more than simply figuring out how to be more efficient in shipping and processing returns and cutting costs

In every supply chain process today, product returns is an important area that needs to be effectively dealt with. In today’s competitive business environment, companies can no longer focus only on forward supply chain management and ignore reverse supply chains.

Organisations that implement an effective returns management solution, in conjunction with a WMS system, is more likely to be able to improve customer service and response times; reduce environmental impact by reducing waste and improve overall profitability.

About us:

Speak to one of our team to understand how Clarus’ WMS system can cost effectively support best practice warehouse management processes, better customer service and highly efficient working for a range of warehouse operations with pay per month options and no IT infrastructure needed.

Our platform can scale from a one user, small depot system to a 100’s of user distribution centre operation. The ClarusWMS platform will cost effectively scale with your business based on demand.

ClarusWMS is a UK based supplier of warehouse management solutions with a wealth of industry experience in third party logistics, wholesale / retail distribution, online fulfilment and manufacturing warehousing.