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How To Solve The Return Problem Through Reverse Logistics Management?

2024/3/5 14:41:00 0

Reverse logistics is the process of moving products and materials upstream of the supply chain, including but not limited to recycling or disposal of products, and moving products away from the downstream of the supply chain, such as the consumer end or distribution center. At the same time, reverse logistics may also include the process of remanufacturing and renovation.

According to the data of NRF and Appriss Retail, the total return of retail goods in 2023 will reach 743 billion dollars, accounting for 14.5% of the total sales.

In this regard, Tom Enright, vice president of Gartner consumer retail team research, said that the proportion was lower than his expectation, which indicated that retailers were taking positive actions against the growing return rate, such as technology investment.

"Over the years, everyone has linked the return rate with the cost of online business, and a fact that cannot be ignored is that with the growth of e-commerce business, the return rate will continue to increase", Tom Enright added.

Douglas Kent, Executive Vice President of Enterprise and Strategic Alliance of Supply Chain Management Association (ASCM), said: "Reverse logistics does not follow the normal process of obtaining goods. If you place an order, it is a warehouse from Ohio, but when you decide to return the goods, the goods will be directed to the centralized distribution center in other places. When they arrive at the new warehouse, the local staff must also be able to process your return receipt. "

In fact, with the growth of e-commerce business, Douglas Kent pointed out that warehousing personnel must now determine how to deal with these goods according to more and more reasons for return.

The complexity of reverse logistics management is also highlighted.

Although the necessity is placed in front of the retail industry, the development of a successful return ecosystem faces enormous challenges. After investigating 150 retailers, Radial found that 60% of them said that repackaging costs were high, and the worst thing was that returned goods sometimes could not even be resold. 43% of retailers said that return management posed a threat to maintaining healthy profit margins.

NRF and Appriss Retail believe that most companies still lack consistency and centralization in the management of reverse logistics. According to their survey, nearly half (44.2%) of companies manage reverse logistics by allocating space in their distribution centers; 30.2% of the companies said that they let each retail store take charge of the process; Another 23.3% of respondents said that they hired a third party to assist in reverse logistics management; Only 16.3% of respondents operate their own reverse logistics centers.

Tom Enright and Ryan Kelly, vice president of FedEx e-commerce and digital marketing, both believe that the company must better understand customers in order to make a more efficient and faster response to returns. Preparation in advance and pretreatment are two key areas in the reverse logistics ecosystem.

Ryan Kelly suggested that enterprises can link returns with customer loyalty. For example, in some cases, customers with high loyalty should have more opportunities to return goods. She also suggested that retailers provide "refund only" services as one of the measures to attract users.

Mark Mathews, executive director of NRF Research, said that if we accurately grasp consumer preferences through early personalized data collection, we will reduce the possibility of late returns.

Tom Enright urges more enterprises to reset or add options for return reasons to optimize their insight into consumer returns. The average additional fee paid by consumers for each return is slightly less than $7, but he expects that more retailers will actively charge return fees in the future, "I personally think this is not a great move, because no matter what the reason for return, this is a general approach. If something is delivered to you, but it has been damaged during transportation, do you have to pay for it before returning it "? Tom Enright added.

Mark Mathews said: "Every enterprise is looking at the reverse logistics problem in the way that is most suitable for itself and target customers. Some enterprises have a much higher degree of online sales. Their views are quite different from those of enterprises focusing on offline business. I don't think there is a one size fits all solution."