What Is Reverse Logistics?

What is reverse logistics and how can it help your business?

As the name implies, reverse logistics is the supply chain working in reverse. That is, the product is moved from the customer back to the retailers, manufacturers or recycling firms.

Retailers have to deal with reverse logistics on a daily basis since customers are constantly returning product for different reasons. How products are dealt with when they go back to the supplier or manufacturer is the domain of reverse logistics.

Here are the main benefits of efficient reverse logistics.

Lower Costs
You can save costs with efficient reverse logistics in different ways for example, on transportation, disposal, tech support and repairs.

When products are recycled and resold, it also results in cost savings.

Higher Customer Satisfaction
If the returns process is easier, there will be less frustration for customers. Goods returned by customers should be managed efficiently to keep costs down.

A well-managed returns process is essential for retaining customers. This is important since it is far more expensive to bring in new customers than to retain existing customers.

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Improved Brand Reputation
How you handle returns is very important for customers. To attract customers, you need a good returns policy. If you don’t handle returns well then you will get negative online reviews. But if your brand is quick in handling returns, then you will gain more customers.

Higher Sustainability
Not everything that comes back in the supply chain is waste. Although certain goods need to be disposed, there are many items that can be repurposed. By using items again, you can increase sustainability. By recycling items instead of disposing them in landfills, you can reduce the environmental impact.

Better sustainability and recycling are good for brand reputation.

Higher Profits
Optimized reverse logistics can help you to improve revenue. The main reason for customer returns is that the wrong goods were delivered. Hence, many items that are returned are in good shape and can be resold easily.

Certain returned items may have to be reconditioned. But even this can result in more profits since there often is a big market for reconditioned items.

The Returns Problem
It is estimated that around 5 to 10 percent of goods bought in stores are returned. But for online buying, the goods return rate rises from 15 to 40 percent. As online buying increases, it means that the returns rate will also boost substantially. Hence, some experts are estimating that the value of goods returned annually may eventually reach 1 trillion dollars.

Since such a vast volume of goods are returned, an efficient reverse logistics chain is needed for dealing with this problem.

Bottom Line
Brands can differentiate themselves by how they handle returns. Therefore brands that have a streamlined reverse logistics flow will be able to attract more customers. And since a large percentage of good sold are returned, brands need to find ways of improving reverse logistics.

MIDCOM sells mobile workstation solutions that improve logistic warehouse issues. Talk to one of our specialist today about how they can improve your logistics processes at (800) 643-2664.

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