What Is Reverse Logistics?
Reverse logistics involves moving goods from their final destination back to the manufacturer or seller, typically for returns, repairs, refurbishments, or recycling. It includes activities such as handling product returns, restocking, repurposing, or disposing of items, focusing on managing the reverse flow of products to recover value or dispose of them properly.
This process is crucial in industries like e-commerce and electronics, where return rates are higher, and sustainability is a priority. Effective reverse logistics reduces waste, improves customer satisfaction, and helps businesses reclaim value through refurbishing or recycling products.
Why Is Reverse Logistics Important?
Statistics on Product Returns
49% of retailers offer free return shipping. Picture this – a customer near the end of their current buying cycle, likes one of two products they bought from you. That’s fine. They are happy at this point. However, when they go to complete their shopping experience – i.e. return half their order – you charge them for shipping. How does that make your customer feel when they have to pay to ship products back? Is this the last taste you want in their mouths as they finish their business with you? What is Reverse Logistics doing to the sales cycle pysche of your buyer at this point?
Here, reverse logistics presents a challenge and opportunity for brands to preserve their relationship with current customers. So – what is your reverse logistics policy? What post-buy opportunties do you extend to your buyer? And how does it impact the level of customer service your brand provides?
Product Returns
E-commerce sellers exists in a consumer culture that expects a forgiving return policy as a means of customer service. This is important to the customer experience when working with a specific brand. For example, 19% of people admitted to purchasing multiple versions of the same product and only made up their minds when they arrived. Afterwards, they return the rest. Oftentime times, they buy when asking ‘what is the reverse logistics policy of this brand?’. And while that might sound more like “what’s the return policy” in their head – the point is the same.
They expect to your brand to honor its commitment in delivery both quality products and service. In this scenario, service looks like a return policy that is as strong as its brand’s product quality. Which is to say – you should be offering 5-star experience to earn that 5-star review (even if they returned a majority of their goods).
When Is Reverse Logistics Used?
What are some scenarios where a business needs to build out a Reverse Logistics Program?
What is Reverse Logistics in-Commerce Product Returns
In 2023, consumer culture indicates that buyers still value the convenience of both brick-and-mortar shopping and purchasing products online. While physical stores experience a 9% return rate, online returns are nearly double, with 20% of all orders sent back—one in five online purchases. E-commerce product returns have become a core aspect of reverse logistics, particularly for small businesses. The apparel industry, in particular, sees high return rates due to issues such as incorrect sizing, styling, or products not matching their online descriptions. Ensuring clothing is modeled on accurately defined body types can help reduce returns in this category.
Beyond apparel, industries like home goods, electronics, health and beauty, and general gifts contribute to the remaining product returns. Common reasons for returns include poor product or packaging design, shipping damage, defective manufacturing, and delayed deliveries. It’s crucial for businesses to have a strong reverse logistics process or product return policy, as this directly impacts customer loyalty and retention. In today’s market, offering free returns and efficient service is key to maintaining a competitive edge, as many consumers expect this from their shopping experiences both online and in-store.
Reverse Logistics in FBA Supply Chain?
Amazon Sellers can be straddled with two scenarios where they need to move their goods backwards in the supply chain. They either have Fulfillable or Unfulfillable products inventoried at Amazon. In either scenario however, they’d like to leverage reverse logistics, to get the goods removed from Amazon’s fulfilment centers. This article explores the difference between the two and more…
This article also examines the following questions and answers:
- What is an Amazon Removal Order?
- Top 10 Reasons to Remove Amazon Inventory
- What is the Cost to Remove Amazon Inventory?
- How Long Do Amazon Removal Orders Take?
- How to Automate Amazon Removal Orders?
Returning Lab Samples
Here’s a unique scenario where an Amazon Seller ships out a test kit. It collects a sample and now needs to return to the lab. In this situation, a Seller needs to employ reverse logistics to connect their lab sample to the lab. With the application of pre-paid shipping labels inserted into the product, the seller can achieve this goal.
Recycling
Recycling involves the collection, sorting, processing, and reprocessing of used products and materials to create new products or raw materials. This recovery process is a key aspect of reverse logistics as it diverts waste from landfills and reduces the need for virgin resources. By incorporating recycled materials into production processes, manufacturers can lower their dependence on extracting new resources, which helps conserve energy and reduce environmental impacts.
