5 Steps to Optimize Reverse Logistics and Product Returns

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The buying experience has completely evolved now that consumers can purchase almost anything online, creating record-high online purchases globally. In 2021, online sales accounted for over 20% of all marketplace transactions. At this rate, we could see the digital sales market surge to $5.4 trillion in 2026.

Shopping online saves time and unwanted hassle, and retailers are no longer tethered to brick-and-mortar locations. However, there’s a hidden cost to this progress – something retailers need to pay close attention to as the digital commerce trend continues.

While online sales continue to grow, so will returns. In 2020, we saw a 6% increase in returns from online purchases, estimating more than $761 billion of merchandise flowing back to retailers. Forbes list these key reasons why businesses were experiencing so many returns:

  • Incorrect fit
  • Damaged or defective
  • Description mismatch
  • Dislike product

For decades, NXTPoint Logistics has partnered with many diverse businesses, providing comprehensive reverse logistic solutions designed to overcome challenges such as transportation, recycling damaged items, and warehousing and distribution services for returns. To help you navigate the online marketplace and product returns, here are pivotal actions every retailer should take to manage supply chain flow:

Create a Return Policy That Works for Your Business

The return policy is one of the most important aspects of online sales. Consumers are more inclined to shop with you when they have options. Design a creative return policy that builds customer trust and meets buyer preferences.

Get Creative With Your Return Strategy

There are alternative strategies to consider with returned products that align with your company’s values, brand, and goals. Including humanitarian or environmental aspects in your return policy is a unique approach to designing a customer-centric strategy. 

It’s common for retailers to have generous return programs. Companies are willing to subsidize returns to build brand loyalty or encourage consumers to donate their items after providing a refund. Not having a return policy can work for one-of-a-kind products or garage sales but will likely prevent future consumer purchases. Limit cost, save time, and fuel customer loyalty with return policy strategies such as these:

  • Boris Model – buy online, return in-store
  • Just Keep It Model – online shoppers receive purchase refund and are permitted to keep inexpensive or large items

Align Inventory Levels With Your Return Strategy

The adage – too much of a good thing – can apply here. Warehouse space is a costly necessity. U.S. warehouse occupancy rates have aggressively increased in the past two years as companies order more inventory to manage market demands. If retailers are already experiencing high capacity, an influx in returns can impact business operations and the buyer’s journey.

Set a Breakpoint Logistics Plan

To know your breakpoint, you need to fully understand your product’s gross margin and all costs related to the return process. Do your customers mail back items via parcels? Are the parcels sorted and re-stocked in a warehouse? If so, consider the cost for each part of the journey to form your return strategy.

Avoid Overpacking

Much thought typically goes into the packaging of a product, but what happens when it’s over-packed with additional purchases in a larger box? Are air pillows utilized? Packing paper? If the over-packing process is mishandled, consumers may receive bent, chipped, or cracked products.

As digital commerce continues to grow, so will returns. The type and quantity of goods, commercial warehouse location, order fulfillment, distribution processes, and costs are vital components retailers should consider when mapping a logistics plan that effectively supports their return policy.

Partnering with a 3PL company like NXTPoint Logistics, you can access a diverse menu of global warehouse solutions featuring comprehensive warehousing distribution, replenishment support, and reverse logistics that pair well with any return strategy.

Learn more about our flexible warehouse and reverse logistics solutions.