A rise in returns in online retail means having an effective reverse logistics strategy has never been more important. With customers ordering several items to get the right fit, changing their mind having made an impulse purchase, or simply ordering a selection of goods with a view to choosing just one or two items, returns are a growing issue. In fact, around 30 per cent of items ordered online are returned, compared with around just 10 per cent for those bought in store.
Statistica’s Global Consumer Survey highlighted that almost half of consumers have returned a product from an online purchase in the last year, and so businesses in the fulfilment arena need to be geared up to manage this, alongside inbound goods from the supply chain. With the right technology in place to track inventory in real-time, capture data from inbound goods using mobile device scanning and ensure warehouse capacity through effective utilisation of space, efficiencies can be created to aid both smooth operations and seamless processes to meet customer expectations.
It is this kind of technology delivered via warehouse management system functions that is helping logistics firms adapt in a continually evolving landscape.
Don’t scrimp on the strategy
Reverse logistics should be subject to the same level of strategy and investment as inbound and outbound logistics. As customers have come to expect fuss-free returns – and retailers and wholesale distributors are often using returns policies as differentiating selling points – it’s a real growth area for logistics firms and one not to be ignored.
The first stage of reverse logistics is when the customer logs the return, at which point the logistics firm must handle the authorisation, establishing key information such as reason – which may include ascertaining the condition of the product being returned – the return shipment method and either approving a refund or replacement shipment in the case of faulty goods.
Having a reverse logistics strategy in place means a firm will already know when an item is destined to be processed and stored before it arrives. A key element of the process will be inspection upon receipt of the returned item, before sending it to the appropriate destination. This could be categorising it as fit to be resold as new or a return, recycling, fixing or refurbishing the item, or disposing of it.
If this multitude of processes was handled manually, not only would it be incredibly time-consuming, but also fraught with risk potential for error. Warehouse management systems (WMS) such as NetSuite are enabling logistics firms to handle these tasks with ease. When the tracking of returns and monitoring of transportation can be done using automation, in an integrated solution where all relevant information can be seen in one dashboard, the activities that follow, such as the issuing of replacement goods or refunds – and updating associated records – can be executed seamlessly. In a world where easy returns and fast order replacement or refunds are a huge customer expectation, and key to customer loyalty and brand reputation, a solution that automates these processes is a necessity not a luxury.
Inventory management is key to efficient returns
One of the key issues that returns can generate is inventory build-up – which can impact on storage space, as well as put a strain on inbound logistics. Ensuring an effective strategy for the receiving, categorising, data logging and put-away of returned items is vital.
With many cloud-based solutions, data logging of received goods in a formal record via mobile scanning negates inputting errors. With a significant proportion of retail and wholesale distribution firms still relying on spreadsheets and manual processes to manually input details, the opportunities for error are high, which can have a disastrous effect on inventory data and a knock-on effect when the item is being picked later on for dispatch. Mobile scanning can facilitate accurate recording of data on both the item and the location destination. Features such as ‘forced scanning’ will prevent the item being logged as stocked unless the item record is scanned and properly fulfilled at the time of receiving it. This is an additional way to prevent inaccurate records. This mobile scanning technology has been increasingly adopted by logistics firms, as the cost of the technology has reduced due the capability of installation on regular devices like mobile phones and tablets.
Optimised reverse logistics can help firms reach Environmental, social and governance (ESG) goals
As well as the financial benefits gained through efficiencies that optimised inventory processes and reverse logistics can help firms achieve, there is also a sustainability case. By refining the processes, waste reduction can be achieved through better, more accurate data on returns, which can help businesses in their future inventory requirements forecasting. Whether it’s information on faulty or low-quality goods with a high return rate, that can lead to better buying decisions from different sources, or low popularity items that can be avoided in future orders, the more accurate and accessible the data, the more strategic the firm can be. When logistics firms can provide this level of information to customers, the customer is armed with the information and therefore the opportunity to improve products, and in turn, the customer experience.
The countless benefits that optimised reverse logistics offers – from financial ones such as cost and loss reduction, through to better customer satisfaction, retention and brand sentiment, and the opportunity to reduce carbon output – are evident. Having a cloud-based solution that offers a 360-degree view of the business, with all data accessible in user-friendly dashboards in real-time, is something that logistics firms should be working towards and prioritising in this new and ever-evolving era of commerce.