What Is Reverse Logistics? | Why It Is Important

Have you ever wondered what happens to the products you return to the retailer? How would they manage all of this on a big scale? Do they just get thrown away in the storage? Not quite. 

There’s a whole process involved in moving goods from the end user back to the manufacturer or supplier, known as reverse logistics.

What is reverse logistics

Reverse logistics is essential for ecommerce businesses, as it can help them to:

  • Reduce costs: By collecting and recycling returned goods, businesses can avoid the costs of disposal.
  • Improve customer satisfaction: By offering a convenient way for customers to return goods to improve customer satisfaction and loyalty.
  • Increase environmental sustainability: By recycling and refurbishing used products to reduce waste and pollution.

So if you’re an ecommerce business owner who wants to learn more about reverse logistics and how it can benefit your business, keep reading!

What Is Reverse Logistics?

Reverse logistics definition states, that the procedure to move products from the customer back to the merchant or a recycling or donation facility is called reverse logistics.

It doesn’t matter whether the return was due to damage, defective, the wrong size, or the customer simply didn’t like it. 

According to Invespcro, For every 100 items purchased online, about 30 of them will be returned. 

As compared to in-store purchases, where only about 10 out of every 100 items are returned.

For merchants, returns are a daily chore – ensuring a smooth process for your customers to complete the return process without hassle.

Small details like these help build loyalty towards your brand even if the product didn’t work out for them.

Reverse logistics management will not only help you elevate the initial shipping experience, but you’ll also be able to exceed customer expectations and retain customers who would otherwise be gone for good. 

Also Check: Does UPS Put Packages In Mailbox

Why is reverse logistics important? (+ Benefits)

One important aspect of supply chain management is reverse logistics.. 

An excellent reverse logistics process makes it easier for customers to ship items back. This can help to improve customer satisfaction and loyalty.

For example, 49% of eCommerce sellers offer free return shipping. Why? because 79% of consumers expect free return shipping.

This helps 92% of consumers to buy again just because of the return process, regardless of the order being messed up.

By understanding the importance of reverse logistics, businesses can refine their bottom line plus, reduce their environmental influence.

Here are some of the ways that reverse logistics can benefit customers:

  • A good reverse logistics process should make it easy for customers to return items. This could include free shipping, return labels, and a quick turnaround time.
  • Easily understandable return policy for a product before they buy it. 
  • Constant updates regarding the status of their return through email updates or text messages.

7 different types of reverse logistics

Implementing these 7 different types of policies will help you to reduce waste, improve customer satisfaction, improve brand loyalty, comply with regulations, and save money!

The 7 main types you need to know include:

  1. Returns: When customers return products, like defective ones, unwanted items, or those that are damaged.
  1. Recycling: When used materials, like paper, plastic, and metal, are collected and processed into new products.
  1. Disposal: When waste materials, like hazardous materials and electronic waste, are disposed of safely and in an environmentally friendly way.
  1. Donation: When used goods are donated to charities or other organizations.
  1. Refurbishment: When used goods, like furniture, appliances, and electronics, are repaired and restored to good condition.
  1. Product recalls: When defective or dangerous products are removed from the market.
  1. End-of-life management: When products are disposed of at the end of their lifespan.

For example, look at Amazon’s generous return policy, which allows customers to return items for free within 30 days of purchase, no questions asked. 

To reduce costs, Amazon recycles and reuses a significant amount of its packaging materials. 

Other companies that have also implemented successful reverse logistics policies:

  • Apple has program, Apple Give Back, allows customers to donate their old Apple products to charity. 
  • IKEA has a program called Buy Back Guarantee, which allows customers to return their old IKEA furniture for a discount on new furniture. 
Types of reverse logistics

Also Read: How To Address a Package

What is the future of reverse logistics?

The future of reverse logistics is to ultimately reduce disruptions caused by returns. From collecting returned products to repairing, reselling, or recycling them. Businesses integrating reverse logistics in their returns process would increase their chances of success.

Tech is going to play a big role in the future of reverse logistics. Having an automated sorting system with real-time tracking will help businesses to improve efficiency and reduce costs. 

Taking these drastic steps would allure partnerships between retailers and 3rd party logistics providers.

In the end, all this logistics is solely pushing the ‘sustainability’ factor. The emergence of technologies like blockchain and AI is going to skyrocket reverse logistics innovation.

You should start investing in tech and keep ‘sustainable’ practices, minimizing product supply chain disruptions from returns to delivery would improve the bottom line.

Concluding Reverse Logistics Management

The reverse logistics process of moving goods from the end user back to the manufacturer or supplier is the key to business success.

In conclusion, reverse logistics is an essential part of supply chain management. By mastering reverse logistics, businesses can improve their customer satisfaction, reduce their costs, and protect the environment. 

This can lead to increased profits and a more sustainable business model.

Overall, managing reverse logistics well is a complex but important task for businesses of all sizes. By investing in reverse logistics, businesses can reap a range of benefits, including increased profits, improved customer satisfaction, and a more sustainable business model.

Amazon is a good example of a company that has successfully incorporated reverse logistics into its business model. 

Amazon’s easy return policy and efficient shipping processes have made it easy for customers to return unwanted goods. This has helped to improve customer satisfaction and ensure the smooth functioning of Amazon’s supply chain.

Mastery of reverse logistics will benefit businesses of all sizes. 

Be smart, and try to implement what your niche and industry sharks made ‘standard policies’ like free return shipping, free labels, or it can be swift package updates. Little details matter to build returning customers.