How to Develop a Reverse Logistics Strategy
Multichannel industry leaders such as Cabela’s, Talbots, Eddie Bauer, Neiman Marcus, Nordstrom, Lands’ End and L.L. Bean have established themselves as the standard-setters for returns processing, allowing customers the flexibility of returning goods with a no-quibble guarantee.
But there’s a downside to a liberal returns policy: Companies have seen return rates increase every year for the past 10 years.
For example, $5 of every $100 worth of goods purchased on the Web are returned, compared to $6 for traditional retailers, according to The Boston Consulting Group and Shop.org. And for many merchandise categories, returns rates are much higher. Moreover, the study found that 40 percent of respondents said they would purchase more online if they had an easier way to deal with returns.
Indeed, product returns present numerous problems for any merchant, including high costs to process, a receiving backlog, space considerations in your distribution center (DC) and the considerable length of time it can take for customers’ accounts to be credited. You also incur costs for re-packaging, preparing products or, in the case of apparel, possible reworking (e.g., steaming garments, folding, replacing buttons).
To make matters even more problematic, many catalogers lack adequate visibility of incoming returned goods, and therefore, are unable to appropriately plan for staffing and other resources needed to process the returns efficiently. (Companies that follow best practices generally process customer returns within 48 hours to 72 hours of receipt and credit the customer within seven days of receiving the return.)
This article’s purpose is to define and identify the benefits to reverse logistics services, and the steps involved in developing an effective and efficient strategy for your catalog.
Benefits of Reverse Logistics Services
Numerous companies, including Newgistics, UPS and FedEx, offer services designed to help multichannel merchants deal with the increasing number of returns and the high cost to process them.