Reverse logistics software designed to simplify returns and improve customer experience
By FarEye | October 13, 2022
The word ‘free’ is one of the most deceptive words. Buy a shirt, get one free! How is it free when I am paying 20 dollars in the first place? Yes, it’s cheaper, I am getting two shirts at half the price, but it’s definitely not free.
But there are a group of people who are doing justice to the word ‘free’. These people are called online sellers. They are delivering everything, from clothes to vegetables, free of cost, and what’s more interesting is that they are even accepting returns free of cost. The question is, are free returns viable or is it that businesses are just being complacent of the fact that they are offering free returns because everyone else is?
The entire process where a delivery person is sent to a customer’s doorstep to pick up the returned product, then sending that product back to the hub and finally to a warehouse where this product will indefinitely stay along with hundreds of other products that met with the same fate, is done without the customer having to pay anything.
From a business perspective, it’s expensive. The delivery drivers need to be paid. There are significant logistics expenses in transferring the product back to a warehouse all the way from a customer’s home. On top of it, there are warehousing and inventory management expenses.
According to research, on a global level, returns account of 4.4% of the revenue organizations loses. This can be further broken down. For instance, clothing retailers see an average of 10% of their sales returned, the highest among retail segments. Electronics, books and other hard-goods retailers follow, with an average of 8.8% returns. In North America alone the cost of reverse logistics is $246.4 billion. Clearly, free returns leave a significant dent on an organization’s profitability.
But then is charging a customer for returns an option? It would have been but since 49% of businesses are already offering free returns and 62% of customers say free returns will keep them loyal, it’s not anymore. In fact, offering free returns is now a matter of being self-satisfied--”Everyone else is doing it, I should be doing it too.”
What’s more interesting is that only 42% of retailers are able to say that they fully understood the financial impact of returns on their business, while 27% admitted that they ‘guess’ or ‘can’t measure it at all’.
Having said all these, it’s good to know that with the rapid evolution of technologies that drive supply chain and logistics operations, it is possible today to have greater control and visibility of reverse logistics processes and optimize operational expenses. Take for instance a digital control tower.
How Savvy Enterprises Manage Returns using Reverse Logistics Software
Businesses across the world are leveraging reverse logistics software to manage returns efficiently and cost effectively. digital control towers to improve returns management. Such software has unique capability to seamlessly integrate disparate supply chain and logistics platforms like ERP, TMS, WMS, and CRM. It accumulates data generated by these systems and displays it on an easy-to-understand dashboard. This empowers logistics stakeholders to know every granular detail of reverse logistics. Reverse logistics software can be referred to as the single source of truth that’s needed to make accurate and fast decisions.
It ensures proper collaboration between supply chain stakeholders and that everyone one is intimated with the right information at the right time.
Then there are advanced supply chain platforms that are powered by machine learning and data analytics capabilities that help businesses automate route planning, task scheduling and job allocation. This significantly reduces the need for constant manual intervention and hence shrinks operational expenses and ensures high levels of scalability. Such platforms can also tell why a particular family of products are being returned and hence help businesses sell better and reduce the volume of returns.
It’s important that online retailers first acknowledge that providing free returns is indeed an expensive proposition and once that’s done we are sure they will embrace advanced tools to optimize returns management.
FarEye has empowered 150+ customers in more than 20 countries drastically improve their delivery happiness score and boost customer loyalty. To learn how FarEye can help you achieve the same, sign up for a quick demo here.