Return to sender: the cost of good customer service

At its core, reverse logistics is the process of returning goods and products from the end user back to the original retailer/manufacturer.

But this isn’t the whole picture.

Reverse logistics can be a complex and challenging process for organisations to manage, with most retail businesses maintaining an omnichannel presence (e.g. store, online, phone), whilst also managing communications with suppliers, manufacturers, and warranty providers etc. This process can look very different from one organisation to another, or even depending on the product being returned.

For the purpose of illustrating how reverse logistics works, here is an example:

With so many stakeholders in reverse logistics, including the consumer, it is imperative that organisations can effectively manage the communications and returns process in order to meet customer expectations and maintain a good brand reputation. Although, equally, an efficiently managed reverse logistics process is not easily achieved when these independent teams and organisations require and exchange order information in varying formats, meaning the time consuming task of manual keying-in data.

During a period of significant shift in consumer buying habits due to the COVID-19 pandemic, the increase in online purchases has also had an impact on reverse logistics.

According to a recent article on BBC news, consumers are far more likely to return items bought online, with approximately 25% of online purchases of fashion goods returned in comparison to in-store purchases at just 10%. Compounding this with overall online sales rising by more than a third in 2020 and consumers becoming more confident with returning their purchases during the pandemic, makes reverse logistics an even bigger, challenging, and costly process for retailers and manufacturers.

The cost of reverse logistics processing can eat away at the profit accrued from the original sale if not managed effectively.

Reverse logistics can involve a number of different parties in communication with each other, including; the manufacturer, the consumer, the retail hub, warranty providers etc. On top of this, all of these individuals and departments could be transmitting data in different formats (e.g. emails, PDF’s, spreadsheets).

With the various documents being exchanged and communication channels being used, these factors lead to the reverse logistics being prone to error and complicating the process further; taking more time, negatively impacting customer relations, and costing the retailer more resources to fix.

However, by capitalising on an efficient reverse logistics strategy, retailers and manufacturers can actually recapture value, meet their consumer expectations, as well as responsibly manage returned products:

Reuse

Many products, or parts of a product, can actually be reused – recuperating costs

Repair

Repairing products that have warranties or guarantees – reducing waste

Refurbish

The consumer market for refurbished goods is growing – increasing the lifetime economic value of the product

Recycle & Dispose

Sustainability is still a key concern for both consumers and retailers/manufacturers. The safe and responsible disposal of certain products is also mandatory according to some governmental regulations

So whilst reverse logistics can potentially be a costly and time-consuming procedure, an efficient reverse logistics process can actually help organisations reduce the overhead costs of their returns policies. This efficiency can be achieved by adopting a more automated approach…

Transalis can help with the automation of the reverse logistics process by implementing digital solutions to absorb data in any digital format from any digital connection.

Transalis manage traditional EDI as well as Paper to Digital to convert files into a format suitable for integration and digitise as much of a trading network as possible. This means key data from PDFs, CSVs, images and other file formats can be extracted for use in other systems, such as ERP, SAP, EDI platforms and databases.

Transalis’ Digital Trading Managed Services encompasses digital solutions to manage aftersales communications between manufacturer, retailer, warranty providers and consumers.