man dealing with e-commerce reverse logistics management

Why Reverse Logistics Management Needs More of Your Attention

An e-commerce business has a lot of moving parts. It starts within the manufacturing process and with suppliers and travels all the way to the end consumer, holding the product in their hand. 

It doesn’t always stop there, though. There’s also the need to put in place a way for that product (or other components in the manufacturing process) to head back through the process when something is not right. It happens to the best of companies. And because of that, your reverse logistics management likely needs some attention.

Consider the Returns Industry

Reverse logistics management heavily focuses on the process of moving products back through the traditional logistics process. It may not seem like a big deal, but reverse logistics is a growing problem for many e-commerce businesses.

A consumer may not wish to purchase a product if they cannot return it easily. The National Retail Federation found that, in 2020, $428 billion in merchandise was returned to retailers. 

That is about 10.6% of the total U.S. retail sales for that year. This number is expected to rise. The report also stated that for every $1 billion in sales a company has, the average retailer will also incur $106 million in returns.

It’s costly, too. Not only is it expensive to ship products back and forth like this, but it also increases the risk of fraud. That is where a product does not make it back to be resold.

More so, many products come back in broken boxes or open containers. How does the company take a returned product, repackage them, and sell them again to recoup some of their investment?

Reverse logistics strategy is a challenge for most companies. And with all of the current supply chain issues, businesses can’t be dealing with a poor reverse logistics process. Let alone the inventory management issues reverse logistics can cause.

Even companies as large as Amazon have had struggles in customer returns. It turned to local retailer Kohls as a way to increase customer satisfaction. Now a customer can just drop off their product at their local Kohl’s store and get their Amazon credit back. The enhancement to the customer experience for return shipping is key.

Why Is Reverse Logistics Management So Difficult to Manage?

A returns process is a big factor in inefficiency and profit loss for many companies. E-commerce has made it even more difficult since there’s no local shop for most goods purchased online to simply be dropped off. Consumers don’t like to wait at the post office or use other services like UPS and FedEx.

The U.S. Census reports that the total e-commerce sales in 2021 were $870.8 billion. That’s a 14.2% increase from the prior year. 

There’s no likelihood that it will slow down either. As e-commerce grows, companies that sell goods online need to consider the options and opportunities for effective reverse logistics.

What Solutions Exist for Improving Returns?

One of the most significant improvements companies may see in improving reverse logistics management across the board is investing in third-party logistics, 3PL. What is 3PL, and how can it directly improve the operation of companies battling a stack of endless retail returns?

For many small enterprise companies, outsourcing with a 3PL is a game-changer. It enhances the e-commerce process. It does this by managing all of the logistics process’s small (and large) components in a more efficient, streamlined manner. 

A company can outsource its inventory management, fulfillment process, and warehousing to a dedicated 3PL. This is not a new concept, but it is one that many organizations haven’t embraced fully. The e-commerce industry is changing that.

It’s possible to customize 3PL services to meet your company’s individual needs. Typically, the entire process involves the receiving, picking, packing, and shipping process. It also includes reverse logistics.

How 3PL Helps with Reverse Logistics Management

What makes reverse logistics management complicated for the average e-commerce business is managing the product when it comes back. When that product lands at the warehouse, the company traditionally needs to find out what’s wrong, add it back to the inventory, repack it if needed, and then get it back out onto shelves. That’s a lot of time-consuming and expensive work in a traditional environment.

When outsourcing these tasks to a 3PL, none of the product return work has to be done by the company. The return is handled by the 3PL instead. 

They handle its inspection, packaging, and then get the returned merchandise back out onto the truck to get to a retailer to sell it. Sometimes for defective or damaged products, disposal needs to be considered when they cannot be resold. That’s handled by the 3PL as well.

It’s even possible to link customer service teams to the reverse logistics provider, ensuring that proper refunds can be sent out to customers. As a whole, a logistics solution like a 3PL can help lower the reverse logistics cost for an e-commerce business.

How Tradefull Improves Reverse Logistics Management

No business wants to deal with reverse logistics. Yet, it is a part of business, especially for e-commerce companies who have to manage the shipping of a return back and forth.

The use of a 3PL like Tradefull enables companies to focus on their product and sales processes. It also helps to boost efficiency by reducing the time investment and the overall cost of managing the reverse logistics process.

Implementing a reverse logistics management process is necessary today. So make sure you choose the best 3PL provider for your needs.

Take a closer look at how Tradefull can provide for your company’s reverse logistics process.

Eric Kasper
[email protected]
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