When running an import and export business, managers typically stop assessing the success of their supply chain and products once they’re shipped and delivered on time. Although this is a good way to track the efficiency of the logistics system, it also assumes total customer satisfaction, yet this is not true.
According to recent statistics, up to one in three orders often result in a return. Indeed, customer returns are an inevitable aspect of the sales process. While it can be a bothersome, and less than desirable component of your business to deal with, your consumers expect clear, lenient policies and flexibility. Specifically where and how they can return the product, irrespective of whether the purchase was made online or in-store.
Statistics from the National Retail Federation in the US show that returns cost companies more than $250 billion in lost sales per year. Another study showed that 97% of consumers take the product return process into consideration when determining whether to shop with a business again. Previously, marketers thought that making the return process complicated was a great way to reduce overall returns. But doing the opposite might actually make your customers advocates of your brand rather than social media nightmares.
Importance of Reverse Logistics
There are many reasons why a consumer may initiate a product return, ranging from quality control issues, like due to defective products or mis-shipments, to customer-centric concerns, like the wrong size or the inability of the product to meet the intended need.
Reverse logistics encompasses the range of activities that occur in the sales process after the product has been sold and delivered to the customer. It can include:
- Getting the item shipped back to you
- Receiving and processing returned items
- Identifying and validating any returns with customers
- Coordinating return shipment to your organisation’s returns processing department for quality testing and problem documenting
- Re-classifying and forwarding returned goods back to inventory or other departments, like for refurbishing, recycling, or disposal
- Shipping replacement parts or additional products to the customer
Managing the reverse process of the product back into your organisation’s supply chain allows you to identify the problem and take measures to prevent it from happening again. You also get to reutilize as many components as possible in making the new product.
A good reverse logistics plan should make the return process as effortless as possible for the consumer. With faster service, you have a better chance of retaining the customer after correcting the error or mixup.
Additionally, planning ahead can allow you to reduce losses by recovering and re-using the product and making prior arrangements for shipping and other corrective measures. Sometimes, you can even avoid the return process by offering a discount to the dissatisfied customer.