Blogs

Reverse Logistics: The Principles, Processes & Potential Profits

Returns hurt – but knowing they could be prevented hurts more.

Many retailers attempt to shy away from the fact, but returned goods can be expensive, frustrating, and detrimental to your sales. Without proper management, an influx of returns can cripple your profits and ultimately tarnish a potential relationship with existing or future consumers.

However, there is a way where you can convert these returns into something sustainable and profitable.

This is where reverse logistics can become your greatest ally. But what exactly is reverse logistics? And how can you adopt it to become a more profitable business?

What Is Reverse Logistics?

Reverse Logistics is a part of supply chain management where goods move from the consumer back to the seller, distributor, or manufacturer — think of it as a backwards supply chain.

Some different types of reverse logistics are:

Returns Management: dealing with returned products or avoiding returns in the first place
Unsold Goods: handling returned products from retailers and distributors back to the manufacturer
Packaging: reusing packaging materials to prevent waste
End of Life (EOL): handling of returns that are no longer able to be sold or serve a use
Delivery failure: returning a product to a manufacturer via a postal service due to failed delivery

The goal is to recoup the value, recycle or dispose of a product in the most efficient way possible while keeping your customers happy, even when they are dissatisfied with a product. Returns are a significant expense for retailers but can also be a big factor in creating repeat business.

The Processes

Reverse logistics is important because it maintains an efficient flow of products. The process creates value, reduces costs, improves customer satisfaction and brand sentiment, and enhances sustainability with waste reduction.

The basic reverse logistics processes are returns, refurbishing, repurposing, repairing, and recycling. It’s best practice to apply metrics to each option to track improvement and success.

Some examples of the metrics to measure include:

Volume and value of the product being resold
Percentage of materials being recycled
Total energy cost for handling returns
Percentage of cost recovered and barriers to recovery
Waste costs

In addition, your business may want to look at these processes to streamline its reverse logistics processes and reduce losses.

It’s used to manage many processes such as:

Returns – when the consumer signals they want to return a product, this requires a return authorisation and shipment, approval of refunds, and identification of the product’s condition
Refurbish or Repurpose – once the product arrives at your location, inspect it and assess its condition. This can be organised into one of five categories: fix, resell as new, resell as a return, recycle, scrap or refurbish
Repairs – reviewing the returned product and determining whether it can be repaired. If it can, move it to the repair area. If not, sell any sellable part
Recycle – if any products or parts of the product cannot be repaired, refurbished or repurposed, they should be sent to an appropriate area for recycling

Potential Profits

Did you know that 92% of consumers surveyed said they would buy again if the product returns process was easy?

Effective reverse logistics management helps improve the returns process and adds value by converting returned goods back into sales – whilst also minimising storage and distribution costs.

Also, people are more likely to buy products from you if you have a unified reverse logistics management in place and are even more likely to become repeat customers if they’ve had a good returns experience. Basically, everyone benefits.

Get In Touch With HUBBED Today

Having a seamless returns solution in place should be essential to your business model. At HUBBED, we enable retailers to have a returns solution that requires no integration and provides a ready-made network of locations for parcels to be dropped off.

Please visit www.hubbed.com/easy-returns-services/ for more information on how HUBBED can enable your business with the right Returns solution.