What Is Reverse Logistics?
Reverse logistics moves goods from customers back to the sellers or manufacturers. Once a customer receives a product, don’t like and want to send it back – they begin the reverse logistics process. In other words, this process begins with the consumer, returning items backward, up the supply chain usually to the distributor. This article explores the roll of reverse logistics in your brand and how product returns impact your relationship with customers.
Why Is Reverse Logistics Important?
Statistics on Product Returns
Let’s review the some quick statistics to provide perspective on product returns.
First, did you know only a minority of retailers – 49% – offer free return shipping? Picture this – a customer near the end of their current buying cycle, likes one of two products they bought from you. That’s fine. They are happy at this point. However, when they go to complete their shopping experience – i.e. return half their order – you charge them for shipping. How does that make your customer feel when they have to pay to ship products back? Is this the last taste you want in their mouths as they finish their business with you?
Here, reverse logistics presents a challenge and opportunity for brands to preserve their relationship with current customers. So – what is your return policy? And how does it impact the level of customer service your brand provides?
Reverse Logistics & Product Returns
E-commerce sellers exists in a consumer culture that expects a forgiving return policy as a means of customer service. This is important to the customer experience when working with a specific brand. For example, 19% of people admitted to purchasing multiple versions of the same product and only made up their minds when they arrived. Afterwards, they return the rest.
They expect to your brand to honor its commitment in delivery both quality products and service. Therefore, your return policy should be as strong as your product quality. Which is to say – you should be offering 5-star experience to earn that 5-star review (even if they returned a majority of their goods).
When Is Reverse Logistics Used?
What are some scenarios where a business needs to build out a Reverse Logistics
In 2023, consumer culture suggests that buyers still want the convenience of brick and mortar shopping whilst purchasing products online. And while brick and mortar stores only experience a 9% return on purchase orders, online returns are nearly double at 20% of all orders. One in Five online purchases will be returned. E-Commerce product returns are at the heart of reverse logistics for most small businesses.
Notably, the apparel industry is responsible for products return. I’m assuming we have our girlfriends and wives to thank for that. In all seriousness though, items are often too small, too big, incorrectly styled or simply not as described on their listings. If you are in this category, make sure your modeling clothing on accurately defined body types!
Moving forward, we still have home goods, electronics, health & beauty, and general gifts, comprising the remainder of products returns. With that in mind, the article above describes the 9 most common reasons for product returns, including but not limited to:
- Poor Product & Packaging Design – Damaged Products from Shipping
- Defective Manufacturing – New Suppliers, Materials, or Product Launches
- Delayed Deliveries – Missing an Event the Product was Purchased For
And seven more reasons for product returns worth reading about in the article above.
Most importantly however is how a brand’s reverse logistics SOP or product return policy impacts customer loyalty and retention. Again, this speaks to the consumer culture of access to free refunds derived from one’s brick and mortar shopping experiences. If you can’t afford to offer free shipping then you might not be in business for long.
All the same, the article also reviews 7 solutions on how to reduce Amazon product returns to protect businesses from these unprofitable scenarios.
This article pivots from a buyer based perspective on Reverse Logistics, towards a seller centered scenario. Amazon Sellers can be straddled with two scenarios where they need to move their goods backwards in the supply chain. They either have Fulfillable or Unfulfillable products inventoried at Amazon. In either scenario however, they’d like to leverage reverse logistics, to get the goods removed from Amazon’s fulfilment centers. This article explores the difference between the two and more…
This article also examines the following questions and answers:
- What is an Amazon Removal Order?
- Top 10 Reasons to Remove Amazon Inventory ?
- What is the Cost to Remove Amazon Inventory?
- How Long Do Amazon Removal Orders Take?
- How to Automate Amazon Removal Orders?
Returning Lab Samples
Here’s a unique scenario where an Amazon Seller ships out a test kit. It collects a sample and now needs to return to the lab. In this situation, a Seller needs to employ reverse logistics to connect their lab sample to the lab. With the application of pre-paid shipping labels inserted into the product, the seller can achieve this goal.
Recycling involves the collection, sorting, processing, and reprocessing of used products and materials to create new products or raw materials. This recovery process is a key aspect of reverse logistics as it diverts waste from landfills and reduces the need for virgin resources. By incorporating recycled materials into production processes, manufacturers can lower their dependence on extracting new resources, which helps conserve energy and reduce environmental impacts.