An efficient reverse logistics process is essential to maximize profits from your sales channels. The growth of online shopping has seen the rate of retail returns climb to as much as 40% of sales.
If product returns from your customers are costing your company time and money, have you considered outsourcing your returns management to a third-party provider? Or have you had an unsatisfactory experience with a provider in the past?
Here’s a guide to reverse logistics services and how to choose a reverse logistics provider that gets results.
What Is a Reverse Logistics Provider?
Reverse logistics refers to the transfer of products back up the supply chain from the customer to the supplier. It includes customer returns from retail sales, as well as the return of products and components to the distributor or manufacturer.
Some companies handle their own reverse logistics needs. But others choose to outsource reverse logistics to a third-party service provider. A third-party service that specializes in returns management will use the latest technologies to manage every stage of the returns life cycle. That will free up your resources to focus on increasing your sales.
A good reverse logistics provider will help you to:
• Elevate your customer experience
• Maximize returns value
• Protect brand integrity
• Reduce operational costs
• Minimize waste
To find the best reverse logistics provider for your business, you need to ask the right questions. Let’s look at 10 questions that will help you narrow down your options in the selection process.
1. Have You Worked With Similar Businesses in the Past?
A reverse logistics expert that has experience in working with businesses that have similar products and order flows will mean they are well placed to work with your business. They will already have the right processes in place to deal with your inventory flow efficiently. And they will be aware of potential challenges and how best to deal with them.
Ask for case studies or testimonials from previous or current customers to see if they recommend the service.
2. Do You Have Product Restrictions?
Some service providers are unable to handle certain types of products like hazardous materials and perishable items. Or they may only be able to handle them in certain locations. So you need to ensure that they can work with your company’s inventory before you spend time pursuing a relationship.
3. How Extensive Is Your Warehouse Network?
Providers that operate from sites close to where your customers are located will be able to process returns faster. This will provide customers with a better service and improve brand loyalty. And if you offer international shipping, you need to outsource returns management to a provider that can process returns from locations outside the country.
4. Do You Offer Systems Integration?
Your reverse logistics partner should use software that integrates with your supply chain management system. This is essential if you operate across multiple marketplaces or plan to expand in the future.
Find out if the provider offers predictive data analytics. The best services offer cloud-based real-time inventory data and alerts. This will help you better manage your inventory, compile accurate forecasts, and provide up-to-date stock information to customers.
5. How Fast Can You Process Returns?
Understanding how many days it will typically take to collect, process, and transport returns will help you determine whether the provider can meet your needs. If your customer returns policy guarantees refunds will be issued within 14 days, a provider that takes 30 days to process returns will not be compatible.
6. How Is Your Pricing Structured?
It is important to understand how much a provider charges to make sure it fits your budget. Does the provider have the ability to provide economies of scale in relation to transportation, liquidation, and labor savings? What’s more, you need to ensure it has a transparent pricing policy that does not have hidden fees for certain services. That could soon add up to substantial extra costs, especially if they are charged hourly.
7. Is Your Capacity Scalable?
If your business is growing fast, you need a reverse logistics provider that can scale up the storage and labor capacity it allocates to your business. It should equally be able to scale down, for example, in response to seasonal demand, to avoid charging you for capacity you may not need. This requires an effective warehouse management system to provide flexibility.
8. Can You Handle Omnichannel Returns?
For companies that have an omnichannel presence, you have additional considerations to keep in mind. With the rise of e-commerce, customers expect to be able to return items in-store that they bought online and vice versa. Your returns management provider should offer as many ways as possible for customers to send returns. This could include doorstep collection, lockers, and other drop-off points, postal services, and in-store returns. This will translate into increased sales, as customers are more likely to buy from a retailer with a flexible returns policy.
9. What Insurance Coverage Do You Provide?
Even the best reverse logistics provider might experience unexpected delays out of their control. There could also be mixups, losses, or damage to inventory on occasion. In those cases, you need to know that the provider will take full responsibility and has insurance in place to provide a refund or compensation. They should have a transparent process so that you know how to make a claim or raise a dispute.
10. How Do You Evaluate Your Performance?
You want to make sure your relationship with your logistics provider is productive. So you need to be able to measure their performance. Regular detailed reports on key metrics will help you to determine how well your returns process is working. They can also identify areas for improvement. It’s also important to consider if the reverse logistics provider has a dedicated account manager that you can leverage as a resource for understanding your returns management process and performance.