Handling Holiday Returns and Minimizing Reverse Logistics Costs This Season
The holiday season sneaks up on us every year. Before we know it, doorsteps will be flooded with packages and shippers will be looking for better ways to handle what is sure to be an extremely busy 2021 holiday season.
There will be several key things handled differently this year versus previous winter holiday shipping seasons. One of the largest hurdles, aside from bottlenecks and delayed shipments, is reverse logistics.
In this blog, we take a look at the issues of returns and reverse logistics as well as how companies can best navigate these tricky scenarios and ensure that they are not consumed by the pressure of the holiday season.
What is reverse logistics?
As the name implies, reverse logistics is essentially the opposite of what we consider the forward logistics process. Specifically, forward logistics can be thought of as the process of raw materials moving through the various parts of the supply chain until finally reaching the customer.
Therefore, reverse logistics is the path of products backward through the supply chain. One of the easiest ways to think of reverse logistics is to consider the pathway of an item that is returned by a customer. However, there are other instances of reverse logistics not involving customer returns as well.
What are the costs associated with reverse logistics?
According to the National Retail Federation, roughly 428 billion dollars worth of merchandise was returned to companies in 2020. This number alone is staggering, but when we think about further costs associated with the reverse logistics related to these returned products, it’s easy to see how having an effective reverse logistics process is essential to the success of a business.
Some of the less obvious costs associated with reverse logistics include:
- Time spent dealing with customers who want to return items.
- Storing and transporting returned items.
- Tarnished brand image, if the process is not easy and effective for customers.
What will impact reverse logistics for the 2021 holiday season?
Unfortunately, purchasing items with the thought that they may be returned has become common practice for the average consumer. Companies like Amazon have made the return process incredibly easy for the consumer, which only reinforces the behavior of “serial returners.” This forced the hand of smaller companies who compete with retail giants to create easy, affordable return processes or risk falling out of favor with consumers.
More and more people are shopping online instead of in stores, regardless of brick and mortar shops reopening as COVID-19 cases have begun to die down. With increased online shoppers come increased returns. Data indicates that 20% of items purchased online are returned, compared to the only 9% of items bought in store which are returned. We can easily see why the increase in online shoppers is likely to correlate with increased reverse logistical considerations.
How Can shippers better handle the cost of returns this winter?
If at all possible, the best way to deal with the costs of reverse logistics is to avoid them. But making an excellent product and having phenomenal customer service will only go so far, as shoppers now prioritize easy returns over almost anything else. It’s best to assume that many items will continue to be returned this holiday season, regardless of any other factors.
In terms of handling returns and reverse logistics this winter, The following options can help shippers stay afloat and even thrive:
Outsourcing Reverse Logistics to a 3PL
Logistics providers handle all of your return considerations, leaving you free to focus on other aspects of your business. Companies that use 3PLs to tackle this portion of their business often enjoy cost savings overall, as 3PLs can identify any inefficient practices and demonstrate where improvements can be made. A good 3PL will aim to improve your company’s logistics practices, which will improve the customer experience. This, in turn, will increase customer loyalty, which will lead to more business and a happier outcome overall. A win for everyone involved.
Automating the Return Process
Spending extra time and manpower on the phone or computer dealing with customer returns is unnecessary today. Additionally, an effectively automated return process can increase customer satisfaction by allowing for increased visibility as well as improved communication. Neither customers nor companies want to spend time on hold waiting to speak to another person. Rather, customers want to be able to click, type, and follow a simple procedure to complete the return process online (to the tune of over 60% of consumers, according to a Comscore survey).
Using Sustainable Return Practices
Extra packaging, pre-printed return labels, and other wasted material all lead to more unsustainable practices. In most cases, customers care that the companies they patronize are attempting to integrate sustainability into their business model. Therefore, shippers should abstain from including anything superfluous in their shipments. This will save money and time, as well as show the public that the company is taking measurable steps to operate more sustainably.
There is no way to control consumer habits; people are going to do what they want to do. Judging by current trends, what people want to do is return a lot of items after they’ve purchased them.
That being said, businesses need to develop reverse logistics practices that don’t force them into a tough financial position. Some of the best ways to overcome these reverse logistical hurdles are to outsource reverse logistics to a 3PL, automate the return process, and further improve your supply chains’ sustainability.
Regardless of how well companies are able to deal with the surge in returns and orders this holiday season, it’s sure to be a busy time. So start preparing now!