The average manufacturer spends up to 20% of revenues on product returns: LogiNext

Dubai, Singapore, New York, 13 July, 2022: LogiNext, a global leader in automation technology focusing on transportation, home deliveries, omnichannel fulfillment, and B2B distribution, today announced the findings of their global study on the reverse logistics market. The study, which was conducted with over 200 brands from retail, E-commerce, and courier express parcel (CEP) segments across the world revealed that the average manufacturer spends between 5 and 20 percent of revenues on returns.

In 2021, the global reverse logistics market size was valued at USD 840.7 billion and is estimated to grow with a compound annual growth rate (CAGR) of 12.4% from 2022 to 2028. Amidst this, LogiNext observed that on average, return orders were between 8% to 88%, with maximum returns observed in the clothing segment. The study further found that among customers, 76% of first time users that had a positive experience on returns were likely to repeat their purchase from the same retailer. Additionally, 62.58% of customers want the return window to be increased to 30-days instead of the traditional 14-days.

Speaking about the findings, Dhruvil Sanghvi, CEO, LogiNext said, “For any enterprise brand into home deliveries, handling returns is a crucial part of the strategy to deliver a great customer experience. Even in a B2B scenario, it is critical to have a seamless reverse logistics process in place to scale effectively. Over the last few years, the importance of reverse logistics has increased multifold and we’ve been helping brands manage this change and improve operational efficiency.”

Reverse logistics are the activities that occur once the orders have been delivered to the customer. It generally involves the customer returning the product to the distributor or the manufacturer which may include faulty product, recycling, servicing, or refurbishment. The recent growth of E-commerce sales has further seen a rise in the returns, which has led the logistics providers, distributors, and supply chain executives to give proper thought to handling reverse logistics.

Most common reasons for E-commerce returns:
- Ordering the wrong item/ Selection of wrong size, colour
- Faulty or damaged goods
- Delayed / failed delivery
- The item does not match the description

Key elements for automating your reverse logistics.

Before choosing your ideal partner for shipping your logistics, here are some pointers that should be considered-
Complete Visibility of Orders: Having complete visibility of the orders (for forward and reverse logistics) is the key to ensuring maximum customer satisfaction. With the ability to track orders in real-time, the store/ warehouse managers can keep track of the orders while customers don’t face any bad experience on order returns, which will ensure they will return to purchase from your store/ site.
Efficient fleet utilization: While most businesses would like to ensure minimum returns on deliveries, they still can’t be taken out of the equation as the reverse logistics market is set to grow at a CAGR of 12.4% from 2022 to 2028. Having your fleet designated to drivers with specific skillsets will ensure efficient fleet utilization for both- forward and reverse logistics.
Ensure the best reach: Setting up a geocode fencing (using pin-codes) will ensure your drivers are aware of which areas or regions to cover for deliveries and reverse logistics needs. This will also help drivers reach the location at the earliest possible thus improving the customer experience while resolving on-demand reverse logistics needs.
Value-added services: Finally, before signing off your reverse logistics provider, ensure they offer services like doorstep quality checks, instant refund, electronic proof of delivery, temperature-controlled shipping containers, and more.