Ways Reverse Logistics Software Streamlines Returns

The cost of reverse logistics is very high. However, the money that businesses can save or recover from activities such as "re-commerce" and employing effective returns management outweighs the initial investment.

Fremont, CA: Due to the hype in e-commerce during the COVID-19 pandemic, online returns have doubled in 2020, highlighting the importance of a solid returns management program that serves both retailers and their customers.

Returns management is a type of reverse logistics. It tracks products from the point of customer return as well as manages where they end up. They can be resold, repaired, recycled, refurbished, or simply scrapped once they have been returned.

The cost of reverse logistics is very high. However, the money that businesses can save or recover from activities such as "re-commerce" and employing effective returns management outweighs the initial investment.

Profit margins are directly affected by reverse logistics. As sales increase, companies' margins may be eroded by the cost of managing the resulting increase in returns. According to the recent survey, the average retailer incurs $106 million in return costs for every $1 billion in sales. Businesses can recoup some of that money by implementing a returns management strategy.

Many retailers and manufacturers choose to use a third-party logistics (3PL) provider to increase their reverse logistics profit margin. Using such a service can help streamline the process, save money over managing returns in-house, and free up resources to focus on other aspects of their operations.

Returns processing costs are typically high for retailers and business-to-business companies. The cost of assessing returned goods for damage, repacking and shipping the items to another location for resale, and refurbishing products results in a loss of resale value.

Recycling can be a costly and time-consuming process in some industries, requiring businesses to adhere to strict safety regulations to ensure items are disposed of properly. Certain non-resaleable products end up in landfills.

Many businesses are uninformed about the true cost of product returns. Even if they collect return data, they lack the tools to analyze it and spend little time evaluating the role of returns in the supply chain. Instead, they concentrate on increasing sales, which leaves them with little visibility into potential revenue losses. Having products stranded in a warehouse can significantly impact a company's cash flow and expose credit issues.