Consumer products manufacturers’ e-commerce operations need a reverse logistics process that can handle a high volume of returned merchandise efficiently and effectively.
That’s because consumers return goods bought online more often than they return in-store purchases. The Reverse Logistics Association reports that e-commerce return rates are three to four times higher than brick-and-mortar store rates. The volume you can expect varies according to product category, but plan on an average return rate of 25 to 35 percent.
Navigating reverse logistics requirements is new ground for most manufacturers that don’t experience processing and filling direct-to-consumer orders. It’s important to consider what’s involved and various process options, including outsourcing, before launching an e-commerce operation.
Efficiency is Important to Both Brands and Shoppers
Returned goods must be inspected, re-packaged if necessary, and returned to inventory as quickly as possible so they can be purchased again. Getting returns back into inventory immediately is particularly important with popular items, merchandise with a short selling season, and during the intense holiday selling season.
An effective reverse logistics process goes beyond getting sellable merchandise back into inventory quickly. It has an impact on brand loyalty, too. According to the Narvar Consumer Report 2018, customers are more likely to buy from you again if it’s easy to return merchandise. Of the nearly 70 percent of surveyed consumers who described their recent e-commerce return experience as easy or very easy, almost all – 96 percent – said they’d shop with that retailer again because of that ease.
A successful reverse logistics process, then, needs to work for both the e-tailer and its customers. Consumers want an easy returns process; manufacturers want and need one that’s affordable and effective.
Reverse Logistics Requirements
To meet these requirements, companies take into account:
- Physical requirements: The reverse
logistics operation needs a separate space dedicated to receiving, inspecting, and processing returns.
- Product inspection: Every returned item needs to be inspected by trained staff to determine next steps.
- Inspection outcomes: Inspectors make next-step decisions based on product condition and consumer demand. Options include returning it to inventory immediately, replacing the packaging, repairing or refurbishing, donating, and discarding.
Manufacturers new to e-commerce often lack the expertise needed to manage these and other aspects of an efficient reverse logistics operation. Outsourcing the function to trusted partners allows brands to master the order fulfillment processes and identify trends and patterns in returns before deciding whether to bring reverse logistics in-house.
Managing Reverse Logistics Costs
An experienced enterprise logistics provider can also positively impact on reverse logistics expenses. When working with an omni-channel accessories company to refine its online shopping and returns experience, Transportation Insight was able to help the company reduce its overall transportation spending by 21 percent. In addition, Transportation Insight’s solution helped the company marry parcel costs with actual product costs to determine net profit on every product shipped.
Brands continue to look for ways to reduce the number of returns and the associated transportation expenses. One major online apparel retailer is working to reduce the number of returns by doing more before the purchase to help consumers feel confident that they’re ordering the right size.
In situations involving heavy home products such as furniture and appliances, companies are getting creative. To reduce the number of deliveries rejected and returned because of damage, some manufacturers unbox and inspect the merchandise in regional fulfillment centers before home delivery. In other situations, delivery personnel are empowered to negotiate with the customer during delivery to resolve potential problems in a way that reduces the return rate.
E-commerce businesses need more than a reverse logistics process – they need one that encourages consumers to continue to buy from them, gets goods returned as cost-effectively as possible, and restores merchandise to inventory quickly.
Ready to learn how manufacturers can create an efficient and effective e-commerce program that includes reverse logistics? Download Transportation Insight’s e-commerce guide, “Start the Cart: A Manufacturer’s Guide to Achieving E-Commerce Fulfillment Excellence.”