There are many specific terms one might come across when considering e-commerce—one of those terms is reverse logistics. But what exactly is reverse logistics, and what does it have to do with e-commerce? Fortunately, we’ve broken down all the important details about reverse logistics in e-commerce and what the concept encompasses.
What Is Reverse Logistics?
Simply put, reverse logistics in e-commerce refers to the return process. The process of moving goods from their point of consumption back to their point of origin usually occurs for two reasons: disposal or recapturing value. This process can get complicated very quickly, which makes it even more important for businesses to optimize their return process. A big part of keeping customers satisfied is making the purchase and return process easy, so that they’re more likely to be a repeat customer. In order to make their return process as hassle-free as possible, more and more businesses are hiring third-party companies to handle their reverse e-commerce services. A reverse logistics management company can help make your return process as smooth as possible, which will make business easier for you, and keep customers coming back time and time again.
The Importance of Reverse Logistics in e-Commerce
Customer Retention
Functional and efficient e-commerce reverse logistics is imperative for businesses to be able to retain customers. Loyal consumers have a much higher value than one-time customers, so it’s important to keep them coming back—having a hassle-free return process is one way to do this. Individuals will be more likely to choose your company versus competitors when you offer the safety net of being able to return products without too much of a fuss.
In addition, an easy returns process can attract even more new customers. While many are accustomed to making purchases online, individuals tend to be more hesitant when making a purchase from an online retailer they haven’t done a transaction with before. Advertising a simple return process can encourage first-time buyers to give your company a chance.
Strategic Advantage
If your business is exclusively online, then your customers only have two clear windows into your company’s operations: your web site and your order fulfillment. The experience they have online when ordering their items is one half of their encounter with your company, and order fulfillment process is the other. If either of these are found to be lacking or don’t meet their standards, it can be detrimental. You want to ensure that every customer receives the best service and has a great experience all around when dealing with your company. Reverse logistics plays a huge part in a customer’s experience—if they have a hard time processing a return, they’ll be more likely to do business with one of your competitors in the future.
ROI
It takes a lot to facilitate an easy and efficient reverse logistics process, but a return on your investment is almost guaranteed. It’ll help you increase sales substantially— it was reported that 45% of shoppers made an additional purchase when processing a return on a web site. While merchants may incur significant costs when implementing a reverse logistics process, the ROI will be immense.
Shareholder Value
When you cash in on the opportunities that reverse logistics can provide, you’ll be able to deliver value to your shareholders. Apart from customer loyalty and retention, keeping shareholders happy is the next thing you’ll need to worry about—and taking advantage of reverse logistics is a great way to do just that.
Elements of Effective e-Commerce Reverse Logistics
There are some key factors you’ll need to take into account when creating an effective reverse logistics process. When making decisions, it’s important to remember that you have two main parties to satisfy: your business and your customers. It can be tough finding the balance between what benefits your corporation versus what will make your customers happy, but it’s not impossible.
To make sure that you create an efficient returns process, you must first consider the reason returns are made in the first place. Usually, it’s for one of five reasons: genuine product returns, products that are unable to be delivered, damaged products, products that malfunction, and product exchange programs. The two main elements that you’ll need to take into account are your return policy, and returns preparation.
Return Policy
When crafting your return policy, you’ll need to consider the impact of returns on your business, while keeping in mind you want to encourage customers to buy. One way to do this is to confirm delivery addresses rather than simply rely on what the customer has provided—this can increase your first-time delivery success rates significantly. Many businesses have found success using this tactic. Depending on the size of your business and average volume of orders, you can either call customers to verify their location, or set up an online confirmation platform. Using this strategy, or one similar, can help you maintain a return policy that’s feasible for you, yet caters to the satisfaction of customers.
Returns Preparation
Dealing with return preparation is another delicate balancing act—you want to make it easy for customers to make returns, but you don’t want to make it so easy that the number of returns increases significantly. Many major retailers use one of the following tactics to keep track of the returns they receive, and to make sure they remain manageable:
Return Forms: Having customers complete these in order to process their return will tell you why they’re returning the item, and help you understand how to handle the returned product.
Return Labels: You may include the courier address and a barcode to help the receiving team identify the items quickly.
Pre-paid Courier: If the purchase qualifies, the return postage may be paid by the retailer. Otherwise, the cost will be deducted from the customer credit. This option can appeal to customers who would rather not arrange for a courier themselves, but simply be charged for the costs.
How Can APS Fulfillment Help You with Reverse Logistics Management?
There are a ton of advantages when it comes to having an efficient reverse logistics process, but there’s also a lot of work that goes into creating one—so why not hire a professional? APS Fulfillment, Inc. handles all types of fulfillment services, including returns. When you hire a third-party company like APS you can rest assured that they’ll be able to give their undivided attention to making sure that all aspects of your reverse logistics operation work together flawlessly. Contact APS Fulfillment today to learn more about how we can improve your returns process.
Photo Credit: iStock.com/luamduan
