Reverse logistics ramps up along with e-commerce
It’s no secret that e-commerce has skyrocketed during the pandemic and the recent holiday season but something not many are talking about is how reverse logistics are also burgeoning, creating both headaches and opportunities for online retailers.
Reverse logistics is broadly defined as “all operations related to the reuse of products and materials. It is ‘the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal’ but most people think of it as “return logistics”.
In other words, taking back unwanted items that were purchased either from the store or an e-commerce purchase. Would it surprise you to learn that an estimated 30% of items ordered online are returned compared to 8% to 10% of in-store purchases being returned?
According to this article from Yahoo! Life news,
“For retailers, the unpredictable nature of reverse logistics can create difficulties on the back-end. Warehouses must be flexible enough to handle any volume of returns that arrives, while staff must be able to process and reintegrate the product into the supply chain with maximum efficiency. Millions of dollars a year are lost to returns and an overburdened system is more vulnerable to these losses than a well-oiled machine.”
In 2020, returns cost an estimated $550 billion, which is 72% more than in 2017. The more expensive items tend to have the higher the probability of return, according to this report from GoShip. According to a report published by Allied Market Research, the global reverse logistics market is expected to reach $603.90 billion by 2025.
Usually, the number of returns from the holiday season are available by now but exact data seems hard to come by, likely because some shippers are still finishing the initial holiday deliveries. Customers are reporting that items they ordered in early December are finally making it to their destination. Projections were that returns for the holidays were going to cost at least $47 billion but initial purchases were higher than projected so it stands to reason that returns will also be higher.
The retail and logistics industries were both already aware that returns are an important part of the overall e-commerce process, but the pandemic has placed that at the forefront. What can we learn from this going into 2021?
- 70% of consumers make a purchasing decision based on the return policy at the retailer;
- 60% of customers expect returns to be handled within one to seven days which puts further stress on retailers to meet these high customer expectations;
- 92% of customers will shop again if the returns were easy; and
- Most shoppers want to return items at a physical location without having to print, pack and ship returns back to the retailer.
Logistics companies and retailers alike are already starting to take some of these facts into consideration, but it’s time for all of us to have solid plans for how returns are managed to not cause supply chain bottlenecks.
We can help
One way you can help reduce problems with your e-commerce business is to partner with a regional 3PL like On Time Logistics. We can serve Arkansas, Oklahoma, Kansas, and Missouri.