Reverse logistics in its simplest form is running processes and products in reverse order to gain as much value as possible.

Reverse logistics could involve returns, repairs, refurbishment and the dismantling of goods to obtain materials and therefore value. The process goes a long way in reducing the amount of waste a company produces and the subsequent effects on the environment.

There is also evidence that shows business response times are a lot faster due to the implementation of reverse logistics, therefore creating a better experience and allowing for better customer service.

So, there are certainly benefits to implementing reverse logistics, but it will all come down to the pros and cons and the type of business that is being operated.

What are the reasons for reverse logistics in online retail?

• The rate of returns

Returns are widespread within the retail industry. The percentage of returns through in-store retail is nowhere close in comparison with the online retail sector. This is by and large to do with the fact that when people make purchases online, they can only usually see what they are buying and not test it or try it. Therefore returns are not only common; they are to be expected as standard.

Online retail is booming with shopping habits a lot different to 20 years ago. So the bigger the online shopping world becomes, the more returns will occur.  This means that the returns system is crucial to an operation. Having a smooth reverse logistics process is not just a benefit, it is a requirement.

• Saving money

By operating with a returns logistics system, it will save a company a lot of money. So, for example, when a customer buys a product and it is returned. Instead of the product being thrown away or wasted, it is put back through the process and through to resale. It could, for example, involve some refurbishment work, but instead of the product being binned, it will be sold. So that means you could gain some or all the original value back.

Also, if a product is thrown away, it will need another to replace it which costs money too. For your online business, stock levels are important, so keep them topped up by maximising your use of returned goods.

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• Environmentally friendly

One of the biggest reasons for reverse logistics is the environment. By reducing the amount of waste that is produced by a company, you are effectively helping the environment. People around the world are working together to help the environment and customers respect businesses who follow suit.

By utilising reverse logistics, because the products are not going to waste and are being put back out for sale, the amount of waste produced will decrease dramatically. Therefore, it will have a positive effect on the environment and people will appreciate that an effort is being made to do so too.

• Stock availability

There’s nothing worse for an online retailer than running out of stock. This could be due to selling out and then having to wait for the supplier to come good with more stock or the manufacturer to produce more. Because reverse logistics is a continuously running cycle, you’ll always get stock coming back through for resale. You always get returns too.

So, when a product is returned, if it goes back on sale, it keeps the steady flow of stock going. Therefore it will prevent online retailers having to declare items sold out as often.

• Feedback

When products are returned, the retailer is going to find out why. It could be due to a one-off fault, or the customer may just not have liked the item. If the returns that are coming through are due to some sort of manufacturing issue, for example, and there’s enough of them to show a common problem, then reverse logistics can come into play.

First of all, the manufacturer or supplier can make adjustments going forward. Also, the returned items could be dismantled or refurbished to resolve the issue. This means they will end up back on sale and value can be reclaimed. Trends are everything, and by spotting the negative ones, it allows solutions to be put in place.

• Customer service

In any business, the most important things are the customer and their happiness . Shoppers these days are budget focused and those who shop online, even more so. Making returns in the past for a lot of people was a cause for embarrassment, but in the modern day, people are more inclined to send items back if they’re not totally happy with them.

An efficient reverse logistics system allows returns to run more smoothly. This is something that will encourage the customer to make repeat business. They’ll also praise the company and recommend your service to other people, potentially new customers, so again it helps enhance the company reputation as well as revenue.

Make sure your returns run smoothly

Now you know the main reasons for reverse logistics, if you’re looking to set up or improve your reverse logistics process for your online business, then Ribble Right Size is here to help. With Right Size, you can repackage returned items in a perfectly sized box, ready to resell and enjoy maximum value and profit.