The Importance of Streamlining Reverse Logistics

Most of us have been guilty of ordering an item of apparel in multiple sizes or colors with no intention of keeping all of the items. If you haven’t, then I bet somebody in your household has!

Increasingly we can receive items within a day of placing an order and then use one of several methods to return the items we don’t want for free. 24×7 shopping has never been easier.

But what about the consequences for the retailer?

As a result of our changing shopping habits, retailers selling apparel or other small items online are seeing growing e-commerce sales but also rising volumes of returns. Back in 2013 the cost of clothing returns in the UK was estimated to have totaled nearly £100m. The same study tells us that 81% of this cost was borne by retailers.¹

The returns process, or reverse logistics as it’s often called, involves not only the time taken to return the item to the relevant store or Distribution Center (DC) but also the process of getting the products ready for sale again.

For retailers selling high fashion items, minimizing the time it takes to get unwanted purchases back into circulation is especially important to maximize the chances of the stock being sold while it is still in season. That’s assuming you have the right process in place to avoid the items being lost or damaged when they return to the depot.

Streamlining the process and tracking items at every step of the reverse logistics journey is vital to getting inventory back into the system as quickly as possible. The earlier retailers have visibility of returns, the sooner they can update their stock inventory system and their website. With reverse logistics cutting into retailers profits by 10% to 20% every year, reducing the cost of returns is essential.²

Furniture retailers face a different challenge

Retailers selling furniture or large electrical goods aren’t faced with the same high returns volumes. While we may be tempted to order a shirt or dress in 3 different colors, we obviously don’t take the same approach when ordering beds, sofas or white goods.

The delivery of large bulky items by 2 man delivery teams does however carry a heavier price tag for retailers, so any delivery failure caused by a customer not being at home can see profit on the sale disappear completely.

If you’re selling large household items then I expect your delivery operation will be looking at ways of reducing the cost of reverse logistics. We would argue that reducing the number of returns is the best way of tackling this problem. Based on the conversations we’ve had with our home delivery customers, here are a few things to consider when designing your order fulfillment operation:

• Allow consumers to choose a delivery slot that suits their lifestyle. Provide a range of choices from next day to next month and offer tight time windows which are more appealing to time-poor consumers.
• Confirm the chosen delivery slot by SMS or email and then remind the customer with a timely notification that provides the option to change the date, or the time. Putting the customer in control increases first time delivery success but also improves their overall experience.
• Tell the customer that the order is on its way on the day of delivery and remind them again of their particular delivery slot. You may be able to offer a tighter time window on the day of delivery maximizing the chances of them being at home to receive the delivery and instilling the customer with confidence in your service.

Dealing with two man delivery returns when they do occur

Even with larger items, customers can still change their mind when their purchase has been delivered.

If for any reason your customers do want to return an item then it’s critical that you can keep track, automatically directing the item back to the DC, the manufacturer or even the scrap site if required.

With the right tools in place the whole process is streamlined and visibility improved, so that retailers know exactly where items are at all times and can easily update inventory to reflect product availability. Critical returns information can also be fed back to order management systems and customer service teams for faster re-ordering or re-delivery.

Returns are not always just caused by a customer changing their mind. On occasion the wrong items can be delivered, or something is damaged in transit. While most retailers will want to get these back to the DC as soon as possible, sometimes there may be other options.

• Drivers equipped with handheld devices and proof of delivery software can quickly send a photo of the item to the customer services team for authorization to offer a discount on slightly damaged goods.
• Proof of delivery applications can be used by the delivery team to follow a pre-defined process to book a redelivery. This second option won’t reduce your costs but it will at least improve the perception of your delivery service.

Using technology to streamline this process provides improved visibility for your customer services team and your DC, and it allows you to provide a better experience for the customer.

The growing need to improve first time delivery success

In a recent Zebra survey³, 73% of respondents said they expect the volume of items shipped to increase, with 23.1% predicting volumes to “dramatically increase”, so the pressure on retailers to provide a better delivery and returns experience is only going to grow.

Faced with the challenge of balancing customer choice with a cost-efficient transport operation, improving first time delivery success is a good place to start for all retailers operating one man and/or two man delivery operations.

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¹ Barclays – www.home.barclays/content/dam/barclayspublic/docs/BarclaysNews/2014/September/the-last-mile-report.pdf
² uk.businessinsider.com/reverse-logistics-and-reverse-supply-chain-research-returns-recalls-repairs-and-end-of-life-returns-2016-10?r=US&IR=T
³ www.zebra.com/content/dam/zebra_new_ia/en-us/solutions-verticals/vertical-solutions/warehouse-management/global-summary/warehouse-vision-2020-study-global-summary.pdf