Reverse logistics is a term that captures the life cycle of a product after it gets to the end user. This could deal with how the customer uses or disposes of the product as well as its packaging. The biggest consideration for companies—when it comes to reverse logistics—is returns. If you don’t already have a plan for managing returns, you are late to the game. The good news is you have Hughes by your side to understand how to manage reverse logistics and stop hemorrhaging money due to the inevitable returns.
Reducing returns is Step 1
A surprising 20% of ecommerce returns are the result of shipping damage. That is a high rate considering the strategies and products available for companies shipping product to the end user. In other words, by simply changing the void-fill or rethinking how the carton is sealed, a company can dramatically reduce the amount of damaged product going to customers.
A second reason that people return items is that they received the wrong item. This is another easy to solve problem in the warehouse with an efficient and properly managed packaging line. At Hughes, we have helped our customers to ensure they are shipping the right products by using vision systems to analyze each package.
A third and final reason that people return products involve the product not meeting the customer’s needs. Whether it was the wrong size or they just didn’t like it, this is a very common reason for returns in ecommerce. Consider your online purchasing process and ensure that your website clearly communicates what the product is and what the customer is getting. Is there enough detail for your customer to make an accurate decision before they press the buy button?
Regardless of the reason for return, it’s important to note that nearly 70% of people won’t even purchase from a brand that doesn’t allow returns. If you even want a chance to capture your customers, it’s important to allow returns, but have an efficient reverse logistics process to manage the coordination that comes with the return process.
Addressing the Increase in Ecommerce
With the rise in ecommerce purchases, companies are dealing with a rise in returns. Couple that with the fact that ecommerce purchases are 3x more likely to be returned than purchases in retail stores, and you are dealing with a lot of returns. Typically in these scenarios, the product is simply not what the customer was expecting. For instance, if a customer can’t decide between two different shoes, they will order both and return the one they don’t want, at no loss to the customer. It’s also hard to gauge sizes, so a customer could order a medium and a large and return the one that doesn’t fit.
The recent explosion in ecommerce purchasing is another reason why time is of the essence for getting your reverse logistics in order. At Hughes, we help our customers to analyze the reverse logistics process for their own businesses and prepare a proper plan of action.
Remaining Profitable and Managing Reverse Logistics
One major way to improve reverse logistics is to implement equipment for automated box cutting. With the ABOT box cutter, you can improve throughput, reduce labor and costs, and increase safety. The machine can handle cutting random box sizes at pre-programmed heights and depths, all while keeping contents safe.
You may also need to consider rearranging your warehouse to accommodate returns. Items that are returned need to be taken out of the box, analyzed for damage, and a decision must be made on whether it gets disposed of or remerchandised for resell. Having a designated space in the warehouse, and a designated team to manage this, may be essential if you have a high rate of returns.
Another consideration is how you manage your customers. It is critical that you have a way to track who is returning and how often they are returning. This has become popular for companies that sell items like clothing and jewelry. Unfortunately, customers will purchase and use for a short period of time then return the item when they’re done. Or, they will treat the online purchase as a chance to “try it on” then return what they don’t want.
Supplement and vitamin companies are also vulnerable to fraud issues around returns. Consider the scenario where a customer purchases an $80 bottle of a particular supplement, replaces the pills with a fraudulent pill (that maybe costs $1 per bottle), and returns to the vendor for a full refund. The customer is actually profiting from the purchase.
As a result of the aforementioned crimes and misuses, companies have introduced maximum number of returns per customer and high-level monitoring on how customers are utilizing the return policy.
Making Decisions about Return Logistics
Ultimately every company that is selling goods has to consider the entire life cycle of their products, even after they reach the end user. As you can see, the life cycle of your product doesn’t end when it gets to the customer. In scenarios where the customer wants to return the product, companies need to be standing guard to manage the return and ensure they are maintaining profitability.
If you are unsure about how to approach returns, or if you are looking to introduce equipment to manage the return process, contact a Hughes reverse logistics expert today.