A guide to Reverse Logistics and returns for E-commerce

Reverse logistics is the process of managing the movement of goods from a customer back to a business. There are various reasons why a product may need to be returned so a key part of the process is making sure all channels and processes of returns are optimised. It’s also important to have clear policies on different types of refunds.

Here are a few examples of why a product may be returned:

• The product was faulty and therefore deemed unsuitable for use
• The wrong product was sent to the customer
• It was not possible to deliver the product and it needs to be returned
• The customer was unsatisfied with the product

Unfortunately, not all customers return products for these reasons and some customers even abuse the processes in place to facilitate returns and refunds. According to a 2022 study on the main reasons why customers return products in the UK, it was found that 32% of customers surveyed had submitted a false damage claim in order to get a refund.

In addition to this, 28% of customers claim they found a better price and 27% submitted a false claim that they never received the item at all. The survey also revealed more legitimate reasons for returns like receiving a defective/damaged item or the wrong size were only experienced by 21% and 18% of customers respectively.

Reverse logistics includes everything from returns management and delivery failure to rental and end-of-life returns and numerous other instances where the product needs to make its way back to the logistics provider, company warehouse, or manufacturer.

For the purpose of this article, we’ll discuss the standard returns management process for goods that need to be returned and refunded.

1. Customer initiates the returns process – the customer choses a delivery partner and arranges for the item to be returned to the logistics provider or company warehouse. The customer will also typically notify the e-commerce business. For brick-and-mortar stores that have multichannel fulfilment, the product could be returned to a physical location.
2. The return is received and checked – when the product is received by the warehouse or the 3pl provider then it is inspected and checked over to make sure it passes quality assurance for resale. Unsuitable items may be thrown away, returned to the manufacturer, or recycled.
3. The return and refund are processed – if the customer is illegible for a refund pending the quality check and everything is okay then the refund is processed. At this stage, the return is also processed and added to the returns system through warehouse management and stock management.

Learn more about how to create an effective returns solution >

With returns being a natural part of e-commerce, they are inevitable in any business to it’s important to stay on top of them and have the right processes and systems in place to ensure efficient and hassle-free returns.

Automating and Streamlining Returns

There are a variety of ways to automate returns to make them more seamless and reduce the amount of management needed. E-commerce platforms like Shopify and WooCommerce both allow automatic returns and have plug-ins available to help you make returns a lot easier by automating returns labels, allowing customers to communicate and tracking returns.

Warehouse Management Systems

A Warehouse Management System (WMS) can also help automate the process by automatically updating stock and providing detailed tracking of returns to help co-ordinate resources to process them when they arrive. A WMS is generally a good idea for maximising efficiency for e-commerce.

Focussing on Customer Satisfaction

Research shows customers who have a positive returns experience are extremely likely to become returning customers so it’s always important to prioritise the customer experience. By creating a simple returns procedure and ensuring good communication throughout the return and refund process can increase efficiency and more importantly it improves customer satisfaction.

Data Insights

Every business is different and it’s important to collect data about why customers are returning your products as it can help identify issues with the products or last-mile delivery process. Returns and refund data can help reduce the number of false claims and also reduce costs by providing insight into how to streamline returns management.

Although optimised reverse logistics mostly benefit the customer,  there are multiple benefits for an e-commerce business and these often have knock-on effects which increase efficiency throughout the business and make e-commerce management more straightforward.

• Customer Satisfaction – the customer experience should be central to aims of any e-commerce business. Optimised returns and refunds decrease customer dissatisfaction and related complaints while increasing the number of returning customers.
• Brand Image – efficient and simple returns processes and effective policies can help bolster brand image and increase positive reviews about the business.
• Financial Savings – the reduced costs of providing seamless returns can help you save both time and money which can be used to help grow and scale your e-commerce business
• Sustainability – by reducing the number of return deliveries and increasing returns management through repurposing and re-using returned products, your e-commerce business can help reduce waste and the impact on the environment.

Learn more about improving the customer experience of an ecommerce business >

More and more companies are looking to 3PL companies to make their reverse logistics more effective by allowing them to focus on other orders and providing more capacity to streamline other aspects of the business.

So, whether you’re looking for a dedicated order fulfilment partner who can also help you facilitate seamless reverse logistics or you’re just looking to outsource your returns management, Allegro logistics can help to create a customer centric approach.

Get in touch today to find out how we can help take care of your reverse logistics.

Read next – The Benefits of Storing your Stock in a Logistics Wearhouse >