Reverse logistics: turning costs into opportunities

Published on 27 May 2021

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In 2020, lockdown and social distancing will have pushed e-commerce to unprecedented heights. This massive 30% increase in deliveries, further amplified by the Christmas shopping season, is leading to a similar wave of returns - nearly a quarter of all e-orders are returned by customers. Here are a few essential keys to ensure that you are in good working order for returns. 

In psychology, it is said that any " feedback ", even negative, is an opportunity. It is an opportunity to better understand the other person and to improve relationships. The same is true in reverse logistics: returns are an opportunity to transform a constraint into a positive customer relationship, as long as they are processed through all channels, the reasons for them are analyzed and the rate of returns is reduced.  

Distancing will have strengthened online shopping 

According to TNS Sofres, 89% of French people intended to use e-commerce for their holiday shopping in 2020. This period, as short as it is crucial, was expected to generate more than 22 billion euros in sales. In terms of deliveries, an operator like La Poste will have managed peaks of more than 4 million packages per day during this extraordinary period! 

45 %  

Is the proportion of consumers who have returned at least one product purchased online in France within the year. Only Germany and The Netherlands have a higher rate in Europe.1 

Reverse logistics, a commercial opportunity. 

Before being a backward process, from receiver to sender, returns are an essential selling point. They represent the third decision factor of e-commerce customers, after price and delivery terms!  

The consumer therefore expects clear information on the retraction periods used (increasing them to one or two months more increases the transformation rate), on the proposed methods (deposit in the mailbox, exchange or refund in the store, transport to the home), on the refund periods (beyond five days, they become an obstacle to the purchase).  

Thinking downstream upstream 

The return to sender is a channel for customer relations and satisfaction. For this, the key word is unification. The retailer must be able to access homogeneous and centralized data on each order and its components (financial, logistical, marketing), whether the customer has ordered from a merchant site, in a store, via a market place or a call center.  

Reverse logistics is also prepared from the moment of delivery, by simplifying the return procedure through the insertion of pre-addressed labels or by inviting the customer to visit the point of sale. If the products are returned to distribution platforms, the system will have to provide information on these temporary stocks and supervise the correct repackaging of the products, reducing the number of operations in order to optimize both time and costs. 

WMS: the control tower 

Such a capacity requires, in the background, the latest generation of Warehouse Management Software. These WMS process returns in real time, regardless of their volume and type. They provide an overview of their status, nature and reallocation: back to sales, forwarding to suppliers, destruction or recycling.  

The latest generation of WMSs also list all physical and commercial characteristics: terms of sale, order history, via sequential package numbers and the various encodings used (GTIN 128, QR codes, RFID or Datamatrix).  

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Multiple benefits 

Unified, the backward supply chain reduces the time it takes to put products back on sale, and thus reduces markdowns. Quickly and accurately classified through the WMS, returned products protect the brand's margins and prices.  

Reverse logistics also helps to: identify "serial returners", know the context of each transaction, record special conditions (made accessible via any channel, at any time).  

Another positive aspect is that return statistics influence commercial policy, by decoding consumer habits and customer expectations. The reasons for returns also constitute an alert on the quality of the products: informed in time, the after-sales service can deal with the situation with the suppliers concerned.  

Finally, if the customer returns his order to a point of sale, it is an opportunity to offer him a discount coupon, a complementary product or a higher range, to introduce him to a new service. Before being a transaction, commerce is really about relationships. 

End-to-end, omnichannel returns monitoring provides valuable insights into the impact of returns on replenishment, product availability and offering relevance. Unified reverse logistics processing creates two strategic advantages for retailers. Commercially, it is a loyalty and growth tool, a key element of a personalized relationship. Financially and logistically, it is an important lever for savings and simplification. It would therefore be a shame, and even harmful, to deprive ourselves of this partner

1 Statista, 2018.