Reverse Logistics: 5 Key Pillars for Success
With the explosion of online shopping, especially during the pandemic, e-commerce sales are booming. Of course, the boost in online buying comes with a significant increase in return rates. In fact we saw the biggest return season after the 2022 Holidays.
Reverse logistics, like routing returns and exchanges, is more important than ever for brick-and-mortar retailers and e-commerce enterprises. Even if your site is well designed and your products well defined, returns will happen. Sizes, styles and other details are often difficult to determine, and certain customers inevitably will require a refund.
In fact, retail returns jumped to an average of 16.6% in 2021, according to a survey by the National Retail Federation and Appriss Retail. (By comparison, in 2020, the average return rate hovered around 10 percent.)
This means that, on average, retailers can expect customers to return about 16 percent of their total merchandise sold — that adds up to over $761 billion in merchandise that winds up back at stores and warehouses.
With this increase in returns, retail stores and e-commerce enterprises must ensure they have a solid strategy and management plan to oversee their reverse logistics.
First, let's look at the five key pillars for reverse logistics success:
1. Customer Satisfaction and Retention: From your customer's perspective, the return and refund process must feel quick and seamless, or you run the risk of losing repeat business.
2. Organized Process: If you're familiar with Lean Methodology, then you've heard about the Five S's (5S). This Japanese productivity tool is based on efficient triage and disposition of your returns. Applying this approach to return management can help you optimize productivity.
The 5S critical components are:
Sort: Organize your returns using a process that yields maximum value:
Repackage, or rehang and reshelve
Repair any products so they can quickly be re-entered your inventory
Refurbish and resell
Disposal by sell to a secondary market, recycle or discard
Set: The triage is orderly with the destination clearly labeled.
Shine: Your work area is clean.
Standardize: Set the process so all staff follow the methodology put in place.
Sustain: Maintain consistency throughout the process.
3. Reduction in Returns: Top-notch customer service is key for brick-and-mortar retail. The first step is ensuring the product purchased by a customer meets their needs. The second step is providing service after purchase in case customers need help with unboxing or set-up.
For e-commerce, clear product descriptions and consumer reviews help buyers make more informed decisions about their purchase. Give specifications (measurements and sizing), list product images that include multiple views, and provide any other information that will help the consumer imagine your product in their home or wardrobe. While this might be labor-intensive, this level of detail goes a long way in reducing the need for returns.
4. Speed: It's vital to set up a speedy process for your customers to return their items and quickly get repaid. An efficient and organized warehouse allows for a speedy inbound return process that will lower overall labor costs and costs of returns.
5. Technology: It's critical for your business to have highly modern and synchronized technology to enable efficient, accurate returns, while reducing wasted time and costs for operations.
Modernizing warehouse technology helps workers move quicker to meet the rising rate of returns from e-commerce. For instance, Rufus WorkHero offers a variety of wearable barcode scanners allowing employees to process returns faster. Since workers can operate hands-free, these scanners improve productivity and efficiency up to 50 percent.
WorkHero also includes Rufus Intelligence, a productivity management software solution that vastly improves inventory management, a vital move for managing returns.
In business, the reality is that returns will happen. Overseeing reverse logistics is challenging, yet essential. Having the proper technology to streamline and simplify your returns process is key — for both your consumers and your employees.