If there’s one improvement you make to your online business this year, consider making it to your reverse logistics.
According to the National Retail Federation, merchandise returns cost U.S retailers more than $260 Billion in lost sales.
Returns are inevitable for merchants. They can’t be avoided. Instead, merchants should take the opportunity to use reverse logistics to increase sales and customer loyalty. Your returns process is a crucial part of the customer experience, and it is time you start treating it as so.
What is Reverse Logistics?
Reverse logistics is the process of moving goods from their point of consumption back to their point of origin for either disposal or recapturing value.
In other words, it’s your return process, which can be quite messy. Reverse logistics includes all the operations it takes to manage the physical movement and cost of returned items.
Reverse logistics can also be referred to as return logistics and reverse supply chain.
How Improving Your Reverses Logistics Can Increase eCommerce Sales
Managing returns can be costly. This in turn affects your profitability. As you saw above, returns are costing retailers billions in lost sales. It’s important for you to take the necessary steps to reduce the costs associated with returns to your business.
To understand the financial impact that returns have on your business, check out this reverse logistics cost formula by logistics company Cerasis.
Returns aren’t just about reducing costs though. A better return process can also help you increase sales!
UPS Pulse of the Online Shopper 2016 reported that 70% of shoppers made an additional purchase when returning in store. 45% of shoppers made an additional purchase when processing a return on a website.
When your return process is hassle-free, you give customers a chance to shop with you again. See what areas of your returns process are the most important to shoppers.
Where to Make Improvements in Your Reverse Logistics Process
UPS Pulse of the Online Shopper 2016 reported minimal increases from 2015 and 2016 in customer satisfaction for different return processes. Returns are three times more prevalent for online retailers, according to NRF, and among the lowest satisfaction among shoppers.
All merchants could benefit from improving their returns process by focusing on the following areas.
All the following stats are as reported by the UPS Pulse of the Online Shopper 2016 study.
Customer satisfaction with whether merchants had a “clear and easy return policy” increased from 66% in 2015 to only 67% in 2016.
This should be your first improvement. Check that your return policy is easy to find and understand. Your policy should have straightforward instructions of what can be returned and how.
Your process should also be clear to your associates. Helpful and well-trained associates are also important to the experience of returns.
Ease of Making Returns In Store
Customer satisfaction with whether merchants had the “ease of making return/exchanges in store” increased from 65% in 2015 to only 67% in 2016.
60% of online shoppers preferred to return items to a physical store when given a chance.
There’s a lot that goes into creating a better in-store return experience. Top areas to focus on are helpful associates, short service lines, easily accessible counters, and having the right paperwork to process the return.
All of these areas are important to creating a better customer experience.
Ability to Process a Return/Exchange Online
Customer satisfaction with whether merchants had the “ability to process a return/exchange online” increased from 62% in 2015 to 65% in 2016.
Customers want to shop online. It’s no surprise then that they are also looking for the ability to process their returns online. Today’s customers demand more self-service technology that allows them to shop on their own time.
There’s still room for improvement here when it comes to the online return process.
Ease of Shipping Product Back to You
68% of online shoppers have shipped items back to the retailer. It’s important to make this process easy and simple for the shopper. If you don’t, they’ll shop with an online retailer who does.
To make that process easier, customers are looking for free return shipping, easy-to-print labels or return label in the box.
For those who prefer to ship the item back to the retailer, 55% prefer dropping their returns off at a carrier location.
These are critical options to give your shoppers who want to ship their return back to you.
Outsourcing Reverse Logistics
If we graded your business on the above criteria, how well would you do? There’s probably room for improvement.
Handling returns and reverse logistics is complicated. It’s can also cost a pretty penny to put such competent processes in place. After all, you’re not a dedicated logistics company.
That’s why many companies, especially the big ones, choose to outsource their reverse logistics, or at least some part it. Outsourcing is a cost effective way to get the competency you need to properly manage the process. It can also have a significant impact on your bottom line.
Outsourcing entails partnering with a third-party logistics provider (3PL). Read our beginner’s guide to 3PLs to learn more about the services they provide.
What to Do Next
The returns process is a crucial part of your business and it can’t be ignored. When managed properly, you can cut costs, increase sales, and improve your customer experience.
To learn more about reverse logistics, follow up with these articles: