Reverse Logistics: How to Manage Your Product Returns Efficiently?

An essential link in the supply chain, reverse logistics is now an essential and strategic element to increase the attractiveness of your business. Read our dedicated article and learn how to turn it into a real strength for your business

What is reverse logistics?

The management of “normal” logistics, in commerce as in e-commerce, consists in managing the flow of goods from storage to delivery to the consumer. As customer satisfaction has become a major stake in a company’s success, it is now imperative to carefully manage any customer returns that may arise. This is what we call reverse logistics: from the consumer to the distributor, with all the steps that follow to manage these returned products.

Thus, reverse logistics is generally made up of 5 factors that we call the 5Rs:

1/ Returns

Consumers no longer hesitate to return a product that doesn’t meet their expectations. To be competitive, a company needs to give them the choice of returning it with or, better still, at no extra cost.

2/ Recalls

If certain items or an entire batch turn out to be faulty, it’s up to you to manage the returns. You may be offered a new item or a refund.

3/ Repairs

Once returned, goods must be inspected and repaired if necessary, so that they can be put back on the market in the best possible condition.

4/ Reconditioning

Increasingly popular with consumers, reconditioning is the perfect middle ground between new and second-hand. It is particularly popular in the high-tech sector – with smartphones and laptops at the top of the list – and in household appliances.

5/ Recycling

E-commerce logistics have a cost. A good way to reduce it is to opt for recycling returned products that cannot be put back on sale. It’s a simple and effective way to manage your overstock and help preserve our planet.

Reverse logistics in figures

If delivery times are carefully inspected by consumers before validating their shopping baskets, so is the management of returns. Here are two figures that will make you realize the importance of good reverse logistics management:

• 30% of products ordered online are returned to sender. This figure is 8.89% for purchases made in a physical store (Source: Invespcro)
• 41% of consumers say they have bought several items with the intention of returning some of them. This is mainly the case for ready-to-wear purchases. (Source: Narvar).

Other reasons why consumers return their orders include:

• In 23% of cases, the reason is the receipt of a different item from the one purchased online. This may be due to an error at the time of purchase or poor product presentation on the merchant’s website.
• You should also be aware that 20% of returns concern products damaged in transit to the buyer. Hence the importance of choosing the right logistics provider to reduce the risk of damage.

Are customer returns really important to consumers? According to a WalkerSands study, 54% of buyers say that free returns and exchanges are the second most important influence in their decision to buy. It’s also worth noting that 67% of consumers find out about a company’s returns policy before making a purchase.

What’s more, 58% of potential buyers express the wish to be able to make a return easily, with clear and precise instructions on the site and/or inside their parcel. Having to send an e-mail or contact customer service to find out how to return a product is now unthinkable. In the same vein, 47% of consumers appreciate that the return label is easy to print, or even already present in their parcel.

Finally, if reverse logistics are poorly managed, 30% of consumers would no longer buyfrom the same site. This rate rises to 60% in the 18-25 age bracket

How to optimize your reverse logistics?

Once you’ve realized its importance, you need to optimize your reverse logistics to attract more consumers. This attractiveness essentially involves :

• A clear returns policy. Your returns policy must be easily accessible on your website, on the marketplaces where your products are sold, or in the packages sent out.
• Meticulous analysis of the causes of returns. By asking your customers why they have returned a product, you can identify recurring causes and improve your offer accordingly.
• Increased return times. In Europe, the minimum return period is 14 days. But a longer return opportunity gives your customer sufficient time to try out the product. This may enable them to reconsider their decision to return it, sometimes in a hurry.
• Returned products can be put back on sale quickly. For optimum management of e-commerce logistics, it’s important to process parcels as soon as they are received. This means knowing whether the returned goods can be put back on sale straight away or whether they need to be repackaged beforehand. This will speed up remarketing and reduce your reverse logistics costs.

Finally,outsourcing your e-commerce logistics is an excellent strategy for boosting your business and enhancing its value in the eyes of consumers. It will enable you to simplify your reverse logistics as much as possible. You can then free up your time to exploit other acquisition levers to the full. A logistics service like Rakuten Fulfillment Network will take care of your customer returns, handling transport costs, quality control and restocking.