Returns is an integral component of logistics and supply chain management. For shippers, effectively managing returns is crucial, as it directly impacts customer satisfaction and a company’s bottom line. In e-commerce, where returns are inherently frequent, developing a streamlined and efficient returns process is vital.
What are Returns in logistics?
Returns, in the context of logistics, is the process of moving goods from their final destination back to the manufacturer or point of origin for multiple reasons. Efficiently managing returns, also known as reverse logistics, is imperative for maintaining customer relations, sustainable practices, and overall economic viability.
Reasons Why Shippers Face Returns?
Delayed Delivery:
According to research, 26% of customers return the product due to delayed delivery. This is not a product defect or simply customers’ moody behavior in play. This can be fixed by implementing a smart returns management system.
Incorrect Order Shipped:
41% of customers returned their order due to it being a wrong one. Shipping the wrong product can be fixed by optimizing the package sorting process.
Incorrect Address:
5% of returns are attributed to wrong/incorrect addresses. This might be a small number, however, this number will grow in countries without proper literacy and areas without clear landmarks, leading to failed deliveries. Optimizing routing is key here.
Product Defects:
A whopping 80% of customers say defective products are the main reason for returns and this should be no brainer for shippers. Better product handling should be done to reduce this issue.
The Cost of Returns:
Returns will cost companies monetarily and brand value. It is vital that shippers optimize the below metric to success in their overall growth.
High operational costs:
Returns necessitate additional operational processes which incur costs. These include the cost of processing, repackaging, restocking, and reselling returned items, impacting the overall profitability aspect of the business.
Customer experience:
The effectiveness and efficiency of a returns process greatly influences customer satisfaction and loyalty. A cumbersome or prolonged process can result in the loss of customers.
Additional Emission and fuel costs:
Many countries are running towards the goal of carbon neutral by 2050 and countries like India. With the UN climate committee and governmentgovt cracking down on companies to reduce emission, returns add more vehicles and more time on road for shippers. More time on the road means more fuel consumption, leading to increased costs.
Top Five Strategies that Shippers can Implement to Reduce Return to Origin
1. Implement Robust Return Policies:
Clearly defined and transparent return policies can minimize returns due to buyer’s remorse and can help set clear expectations for the customers.
2. Enhance Quality Control:
By implementing stringent quality control measures, shippers can reduce the number of defective products reaching customers, thereby reducing the frequency of returns.
3. Leverage Technology:
Incorporating advanced technologies such as Artificial Intelligence and Machine Learning can assist in predictive analysis, inventory management, and automation of the return processes, reducing manual errors and operational costs. Let’s dive deep into the type of technology solution that can implemented to reduce returns and its costs
- Smart Geocoder: By implementing a smart geocoding solution into your routing system, the hassle of wrong addresses won’t hurt your business anymore. Locus’ intelligent routing solution with geocoding feature converts fuzzy customer addresses into precise latitude and longitude coordinates for quicker delivery.
- Delivery Linked Checkout: Locus’ Delivery Linked Checkout, is a capacity backed delivery system with automated vehicle and driver allocation and dynamic routing capabilities to cater to a wide variety of delivery windows from 1-2 days to a few hours, thereby providing customers with on-time delivery without overspending or overburdening drivers.
- Auto Sorting Packages: Manually checking the packages ,addresses, and then assigning them to a compatible vehicle is a tiring task to say the least. It is also inefficient due to its capacity to cause errors in shipping. Leveraging an automation driven sorting software can help companies reduce sorting time and personnel cost, and most importantly, reduce probability of wrong orders being shipped to customers.
4. Optimize Reverse Logistics:
Developing a dedicated reverse logistics strategy that includes efficient transportation, warehousing, and disposal practices can streamline the handling of returned goods and mitigate environmental impact.
5. Customer Education and Support:
Educating customers about products and providing comprehensive support can mitigate misunderstandings and reduce unnecessary returns.
Conclusion:
Returns are inevitable in the logistics landscape, posing multifaceted challenges for shippers in terms of operational cost, customer satisfaction, inventory management, environmental concerns, and regulatory compliance. To tackle these challenges, it’s essential to create strong return policies, improve quality checks, integrate technology, streamline reverse logistics, and include sustainability efforts.
By focusing on these solutions, shippers can not only mitigate the challenges posed by returns but also transform them into opportunities for enhancing customer satisfaction, reducing operational costs, and contributing to environmental conservation. In this highly competitive market, adapting and optimizing the returns process is a strategic imperative for sustaining and thriving in the long run.
Looking to mitigate the challenges posed by returns?