You may think you know logistics, but do you know “reverse logistics”? In a similar manner to regular logistics, processing and sometimes disposing of merchandise that is surplussed or returned to your business properly and effectively can have an important impact on your workload and bottom line. In this blog post we will cover the basics of reverse logistics.
What Is Reverse Logistics?
When we visualize or conceptualize commerce in general, we tend to think of it as a positive, one-way flow of products and services – a business provides products and/or services to a customer who needs or wants said products and/or services, currency is exchanged, and both parties are satisfied. This is especially true for a new business plan or venture – who wants to focus on the negative? However, all of us know from both personal and professional experience that this “flow” of goods and services is not a one-way street – products are returned for a wide variety of reasons, products go unsold and become outdated, expired or simply unsellable, and manufacturers recall products, usually due to a defect or hazard discovered in the final product.
Create A Reverse Logistics Management Plan
If your e-Commerce business involves the sale of physical products, it is extremely important to create a plan for managing your reverse logistics. Properly managing reverse logistics can result in happier and more satisfied customers and fewer problems with the management, storage, and return or disposal of defective and unsellable products. Remember, you may be competing with e-Commerce giants who are also masters of logistics like Amazon.com, and properly managing your reverse logistics could be the difference between “sinking” or “swimming” with the “big fish”.
Develop An Official Returns Policy
The first step towards implementing effective reverse logistical processes is developing an official returns policy for your e-Commerce business. Even if you don’t consider reverse logistics to be an important component of managing your e-Commerce business, or your city or state does not legally require businesses to implement a return policy, it is an important step towards establishing a good relationship with customers and potential customers and mitigating customer disputes. Creating a return policy that is acceptable to both your business needs and the requirements of your customers requires research – start by reviewing the return policies of your competitors.
Make Sure It Is Friendly
If your return policy is less customer-friendly and more draconian than your direct competitors, you could quickly lose return customers and find the reputation of your business damaged by customer complaints and poor reviews. It is also important to consider the type of products you are selling and how easily it will be for you to process returned merchandise. For instance, if you are an authorized seller of new merchandise, your return policy should be more lenient and relaxed than if your business specializes in selling closeout and discontinued merchandise. Finally, it is important to find out if your city or state has laws related to the posting and distribution of your return policy. Even if it is not legally required, it is considered a best practice to post your return policy on your website and include a printed copy with each order.
Include A Return Shipping Label
One of the easiest ways to manage reverse logistics in relation to the merchandise returns is to include a return shipping label. This may not be practical or feasible for small shipments of low-value items, but if you sell a product that is valuable enough to be processed as a return, including a return shipping label will encourage your customer to ship the item in a more timely manner and will allow you to more quickly process the return once it reaches your home, office or warehouse. Again, this depends on the nature of your business and the products you are selling – for new and/or premium items, a return shipping label may be the difference between a smooth return process and a difficult one, while it may be an unnecessary expense if you sell closeout or discontinued merchandise.
Think About Repackaging
Finally, if your business involves selling an original product, it is important to establish how you will manage refurbishing and/or repackaging returned merchandise. If the product itself is defective or damaged, you will need to follow the proper procedure for disposing, recycling or returning the product to the site of manufacture. However, if the return involves a working product, it is possible to refurbish that item, repackage it and return it to your active inventory.