Read on for tips for designing a successful reverse logistics program.
Online shopping is getting bigger each year. With an estimated 2.14 billion global online buyers by the end of 2021, the needle on global e-commerce growth is being pushed into overdrive. Considering that number was just 1.66 billion in 2016, it’s evident that this growth is not only substantial but has solid footing.
While you may be shaking with excitement at the prospect of reaching all those customers, it’s important to remember a (sometimes forgotten) hurdle to those sales – the customer returns. At least 20% of all products ordered online are returned – and this number is only going up. According to Statista, 2020 return deliveries were estimated to cost $550 billion in the U.S. Regardless of the reason for return, reverse logistics are an important part of an efficient and effective supply chain. A report done by the Reverse Logistics Association says that managing this process accounts for 10% of total supply chain costs. If the supply chain flounders due to unproductive processes, the problem can multiply and reduce profit by nearly 30%.
With this information in mind, returns are clearly the new normal. So, what options do businesses have for designing a reverse logistics program that can become both a competitive advantage and a healthy source for loyal customers? I looked to my furry office assistant, Max, from the past pandemic-year for answers and found several lessons learned.
Dogs are always upfront with you.
Whenever Max wants something, whether it is to go outside, a treat, or just to play catch, he lets me know. He will bark at the door, sit by the treat cookie jar, or bring me his ball. He’s clear and obvious about what he wants.
Being upfront about your business focus, is always a good trait to look for in a partner, and in your supply chain, visibility is a tried-and-true benchmark for effectiveness. While most logistics professionals think only of outbound visibility, it’s important to understand what is shipping back to you, how much and when it will arrive back to your facility. [Back on Track: How Shipment Tracking Affects Customer Experience]
Without key shipping data and information, your entire reverse logistics process could be a massive blind spot in your supply chain. A key combination of data from the shipping system, including what was shipped, when, and to whom, as well as the carrier tracking data (think ETA and exceptions) can improve visibility into your end-to-end supply chain. To effectively address this problem, advanced visibility technology must be applied to the return package journey. When your team tracks this kind of granular information across your entire supply chain, your business can optimize its effectiveness.
By implementing visibility into your supply chain, operation costs are kept as low as possible, avoiding unnecessary labor costs, additional facility space, or internal company time wasted on handling reverse logistics. As innovative supply chain trends and technology emerge, successful shippers will partner with companies who allow for flexibility in their solutions, enabling adaptable technology which can anticipate challenges. [Learn more: Top 4 Reasons Companies Switch their Parcel Shipping Software]
Dogs are persistent, and it pays off.
Max sits by the window and waits for the squirrels to come down from the trees every single morning. He also won’t stop playing catch until he has caught and returned his ball at least 10 times. If he really wants someone to play with him, he will hold a staring contest that eventually wears down even the strongest of visitors.
While staring contests might be uncomfortable in a business meeting, the persistence of a dog is unquestionable. This is a nice reminder to keep working toward top-level optimization in your strategy – including thinking about anything that will help with getting your product back into inventory, for example, a barcoded RMA number at the bottom of the return shipping label. This label could accomplish multiple things when it is scanned by the receiving staff such as:
- Checking the item back into inventory
- Instructing staff where to restock the item
A timely “put away” process is important to keep your inventory turns high. This is especially true when you consider the other time-consuming steps that could be a part of this process like inspections or repackaging. [Read on: Many Happy Returns: What You Need to Know About Hazardous Material Returns]
Dogs value routines but can adapt and thrive.
Dogs thrive when they can get into a routine. For Max, a treat comes after a walk. When the lights go out at night and mom goes in her bed, it’s time to be quiet and go to sleep. Sometimes, disruption in a routine can cause anxiety but typically over time, these changes can lead to a new routine. When Max first came to live with us, our other dog had never had to share attention, and was not pleased about his new brother at first. But as the weeks and months passed, he warmed up to Max. I had been initially worried that after having been the lone dog for over 5 years, he wouldn’t adjust to sharing us with another pet, but I was wrong — he adapted wonderfully, and he’s happy to have a doggie best buddy in Max.
In the same way, a returns logistics program or routine should be standard in your supply chain. It’s crucial to have rules in place for every scenario of the returned item. For example, does the return always go to the nearest Distribution Center (DC)? Or does it go to the nearest store? Or to the location where inventory is most needed? Do you have a repair or refurbishment center that it must go through first?
An elegant and advanced solution has capabilities for managing these complex rules to adapt to the rapidly changing shipping environment, supporting both operational capacities as well as performance effectiveness. [Explore More: Everything You Need to Know About Complex Business Rules – In Five Minutes]
Your shipping software partner should not only have business rule management competence but also be able to integrate with other software to look at all inventory sources including stores, warehouses, third-party logistics (3PL) providers, or wherever your inventory is stored. These omnichannel fulfillment strategies are necessary to compete in the aggressive e-commerce market today. [Top 2 Most In-Demand Parcel Shipping Technologies in 2021]
Dogs see almost everyone as a friend.
When Max and I go to the dog park, there is no instance of when he’s afraid to join a group of dogs. He is all in from the moment I take off his leash. People and dogs alike, Max says hello to everyone. Max doesn’t see race, gender, or social standing. If you are in the same room as him, you are his friend.
In the business world, trust is earned by being consistent over time. Even though the focus for this blog is on steps the business can take rather than convenience for the customer, it is still necessary to address the efficiency of the returns process for the enterprise.
Shippers should consider how easy it is for the customer to request or process a return with minimal customer service investment. For example, it may be best to include a printed return label with the outbound shipment. Especially if your return rate is high for items like clothing or shoes. Another option is to allow to the customer to self-serve printing a return label from the website. To be frank, the customer needs foolproof and reliable instructions to follow so they don’t have to call and have their hand held through the process. These calls waste not only the customer’s time but can be expensive when acknowledging staffing, facility, and customer retention/loyalty.
It’s easy to see that this kind of elevated customer experience and improved brand loyalty increases sales and builds an army of loyal customers with superior shipping experiences. This experience is only possible by leveraging the fastest carrier engine and with complex business rules, rate shopping, and omnichannel initiatives now familiar system requirements, a robust and advanced multi-carrier shipping software is essential. [Why You Need a Processing Speed That’s Fast and Furious for Parcel Shipping]
The importance of connection.
Max is a serious cuddler, and it is one of my favorite things about him. Even if I’m cranky and not paying much attention to him, he still wants to cuddle. If I’m busy working, he’s lying beside my desk.
As with the previous point, it’s important to remember the value of human interaction and connection. The customer service portion of reverse logistics can be extended into the business portion as it affects the overall customer service relationship. Some large e-commerce customers have partnered with national carriers like UPS and FedEx to provide refunds as soon as the items have been turned over at a participating carrier’s store. Others use inbound tracking and basic weight checks to initiate a refund during transit. These types of customer-first measures can remove days from the reverse logistics process, encouraging customers to spend more with that retailer.
Investing in better shipping systems creates better ROI by elevating the customer experience, building brand loyalty, increasing sales and turning customers into loyal advocates. Nothing will give you an ROI quite like an elite multi-carrier shipping software, because not only will you receive a major payback, but you will also gain unprecedented efficiencies and functionality.
Partner with the Big Dogs – ProShip
It’s clear over the past year and half that consumer expectations are changing and that the needs of the consumers of 2020 will not necessarily reflect the needs of the consumers of 2021 and beyond. Shippers should take note of the lessons from above for the difference between successfully handling reverse logistics and failing to provide a personable, memorable online shopping experience. In the same way that we can teach our dogs to sit, stay, and roll over, they can teach us a few things about managing our reverse logistics process. It all comes down to partnering with ProShip’s top multi-carrier shipping software solution which can set shippers apart from the competition and boost profits.