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How to Efficiently Process Returns With the Help of Reverse Logistics Technology

Posted: July 11, 2019 by Ly Phan

How to Efficiently Process Returns With the Help of Reverse Logistics Technology

The challenge posed by product returns for e-commerce businesses refuses to go away. As we’ve covered before, 30% of products bought online are sent back, compared to just under 9% for brick and mortar stores. Attempts at reducing the rate of returns have failed to make an impact, leading to companies utilizing reverse logistics technology.

Reverse logistics is the process that handles any inventory which is returned to the warehouse by the retailer or consumer. In setting up a system that sufficiently handles any returns, businesses will have the opportunity to turn costs into profit. In this post, we will set out how you can achieve this goal.

 

Accept the Reality of Product Returns

The first step is to accept the reality of modern shopping behavior. In a 2018 survey conducted by a retail management firm, Brightpearl, 40% of retailers across the US and UK noted a significant increase in “intentional returns” - where shoppers buy multiple products in the knowledge they will return some of them. Additionally, 85% of consumers expect retailers to provide returns services for free. 

Brightpearl’s report, A Returns Tsunami for Retail, paints a picture where product returns are now a fact of life for retailers. Therefore, as the report implies, businesses should find ways to deal with reverse logistics rather than continuing to fight it.

With 69% of retailers not deploying any reverse logistics technology to process those returns, there’s an opportunity for businesses to get ahead.

For suppliers and manufacturers, it’s essential to understand the pressure retailers - e-commerce stores in particular - face from consumers. The competition is intense, and shoppers value the ability to easily return items for free - with another survey suggesting 92% of consumers would use the store again if they are satisfied with the returns process. 

In turn, this leads to retailers looking for partners who can work with this new reality and assist them in dealing with it in an efficient manner.

 

Organize the Supply Chain

Returned products do not need to be thrown away. Following a reverse logistics pipeline can create new opportunities.

To make the most of the reverse inventory, the first step is to get organized across the supply chain. The key is to focus on the basics and manage relationships between manufacturers, suppliers, and retailers. By keeping those key communication channels open, the stakeholders would be able to find solutions that suit all parties.

Before we look to sophisticated technological solutions, consider the following:

  1. The layout of warehouses: The layout of warehouses is an important aspect of product return management. Simply having a designated area to process those returned items will go a long way to ensuring a smooth backward supply chain. The designated spot, ideally near the delivery area, should give teams space to sort the items, separate into categories, and decide whether they can be resold or not. For instance, products like smartphones need to be checked thoroughly before going back to the market.
  2. Staff engagement: Ensure your staff understands the processes and how to categorize the products. Take the time to train staff to identify which items returned can be resold straightaway, while others may need to be repaired or thrown away. Additionally, the repackaging of items can be done quickly and efficiently with the right training.
  3. Transportation: This is one of the more difficult challenges in dealing with returned products. However, there are a number of ways forward here. For example, picking up returned products as you deliver items to retailers is one such solution. It is an area that needs constant communication with different stakeholders and continual review.

As the pipeline above shows, it is possible to have an organized, streamlined reverse logistics process - one which is both efficient and environmentally friendly.

 

Embrace Data-Driven Solutions

Using a barcode system enables businesses to process returns quicker and more efficiently.

For all stakeholders, technology offers the opportunity to optimize the returns process. Manufacturers and distribution centers, for instance, can benefit from warehouse management software (WMS) which can help with automation and analytics. 

One of the key areas where software can help is providing data visibility and the ability to track items in real-time. In the light of a survey conducted by DC Velocity revealing only 42% of retailers have a full understanding of the financial impact of product returns, this visibility can prove invaluable to businesses. 

Gaining a complete picture of the return rate and its financial impact is a crucial first step in getting to grip with the issue. The data will also provide insight into the trends and the types of products that get returned more than others. In this sense, information is power and enables businesses to organize their operations accordingly.

For example, Dicentral’s Smartturn solution gives you the ability to track products throughout the supply chain with a barcode system. Once an item returns to the warehouse, you will be able to swipe the bar code and have all the relevant information to hand. If the product is still in retail condition, you can quickly process any refunds due and place it back onto the market within minutes. 

While you will be able to gain a good idea of the volume of returns, you will not have any guarantee on what condition these returned products are in. If a product needs repair or repackaging, inventory management software makes it easy to follow the item through the process. In doing so, businesses will be able to maximize efficiency and reduce the time it takes to get items back on to the market.

Also, in today’s environmentally conscious age, you can use WMS to reduce the carbon footprint of those product returns. The real-time tracking of items will enable you to organize the delivery and pickup of items concurrently, thereby reducing the number of journeys required. This has the positive side effect of reducing costs at the same time.

In short, you can use technology to ensure a smooth and efficient returns process which minimizes the cost to your business and maximizes customer satisfaction. As we pointed out earlier, 92% of shoppers would use a store again if they handled product returns without any hassle. 

 

Combining Technology With Organization

The key is to take a holistic approach with product returns. Beyond accepting the fact it’s now a reflection of online shopping behavior, it’s essential to have a dedicated returns policy in place. E-commerce businesses that fail to do so run the risk of not attracting purchases at all. The statistics suggest consumers embrace the ability to “buy and try later.” 

Enabling shoppers to easily return products may seem counter-productive. However, using a mix of cloud-based WMS and sufficient organization of warehouses and teams, you can turn your returns policy into a powerful, cost-efficient marketing tool. 

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