Blog Posts The Key to Repeat Customers? Mastering Reverse Logistics

Returns are inevitable – especially if you’re an online retailer or ecommerce brand. A whopping 15 to 40 percent of online purchases are returned, according to Happy Returns CEO David Sobie. That percentage can be even higher for apparel items.

Fast, hassle-free exchanges and refunds are a must in order to keep ecommerce customers coming back. In fact, 73 percent of shoppers say their return experience impacts their willingness to continue shopping with a retailer, according to UPS’ Pulse of the Online Shopper study.

Recognizing the need to provide a positive customer experience, about half of retailers today offer free returns, studies show. But at what cost? Retailers lose a third of their revenue to returns, according to RSR Research retail analyst Paula Rosenblum.

Controlling reverse logistics costs

While returns are an assumed associated cost of the ecommerce business model, companies should monitor their operations carefully and be proactive to keep costs in check.

“Start by shoring up infrastructure,” advises Perry Belcastro, Saddle Creek’s senior vice president, fulfillment services. “Make sure information systems, distribution networks, and transportation capabilities work together seamlessly.”

He recommends positioning distribution facilities near end customers to reduce transportation costs and speed the returns process. Establishing relationships with carriers, understanding pricing considerations and negotiating rates are other important steps.

It also can be advantageous to provide multiple options for returns. Omnichannel retailers often allow customers to return online orders in stores, eliminating shipping costs entirely.

“The key is to make reverse logistics as efficient and cost-effective as possible,” Belcastro says. “Optimize the process, move it closer to the consumer and control transportation expenses.”

Managing high-volume returns

Spikes in return volume can be particularly challenging for retailers and ecommerce companies. After the holidays or a major promotion, plan to have flexible space and staffing available.

About half of distribution center managers (52 percent) don’t have the ability or resources to determine whether returned items should be sent to the vendor, moved into inventory or discarded, according to an Intermec study.

Having the right technology can help, Belcastro says. A sophisticated order management system (OMS) can provide a unified solution for managing returns and exchanges. An OMS helps to streamline the returns process and get salable products back in inventory more efficiently and cost effectively. 

However, nearly two-thirds of U.S. retailers are not deploying technology solutions to process returns, a recent Brightpearl report indicates.

Leveraging your 3PL

The fact is, retailers and ecommerce companies often are ill-equipped to manage the overwhelming influx of returns they face today. Done right, reverse logistics requires a significant overhead investment which many companies are unprepared to make.

A third-party logistics provider can be a cost-effective alternative. 3PLs typically offer the strategically located facilities, scalable space and staffing, and advanced technology necessary for efficient returns processing. They may offer inbound quality inspection services and have the ability to refurbish or repackage items if necessary. They’re also should have the expertise and processes in place to ensure optimal performance.

“Reverse logistics is a critical aspect of the ecommerce sales cycle,” Belcastro says. “If it’s not in your wheelhouse, find an experienced 3PL partner to help you master returns management.”