Impact of Reverse Logistics on Customer Loyalty and Experience
By Omid Torkian, Shipbots - eTailValet.com
Reverse logistics is not a new process in the eCommerce industry. According to a US industries’ report, in 2017 alone, eCommerce purchases worth USD 120 billion were returned. However, in recent years, the system of processing returns and exchanging goods has significantly improved to maximize customer loyalty and customer experience. Proper implementation of reverse logistics is integral to the survival and success of eCommerce businesses, and it comprises of various strategies such as managing damaged and seasonal inventory, recovery, and recycling of returned assets.
While the peak holiday season means increased work for all those in the retail business as well as the highest sales volume of the year, the increased work does not simply end there. The post-holiday returns can be too many and too messy, since not all of them are simply unwanted goods returned in the form they were originally shipped in. In fact, a good portion of the returned goods is damaged, broken, leaking, spoiled, or replaced with a counterfeit object. This presents a big challenge to many retail companies’ reverse logistics operations, as it forces personnel to spend extra time sorting and processing to mitigate financial loss while ensuring customer satisfaction. As retailers begin to understand the importance of reverse logistics, they are investing more focus and resources in improving their current system to extract maximum value from returned goods.
This article aims to enlighten you on how businesses process returned products, how reverse logistics strategies satisfy customers, and how to cater to fraud and counterfeit returns.
What Is Reverse Logistics?
Reverse logistics is the process of moving finished goods from their final destination to an earlier stage in the supply chain. Customers return their ordered goods for various reasons, such as problems with the order, missing items, damaged goods, late deliveries, change of mind, or dissatisfaction with the received product. While it is inevitable to prevent this from happening, executing and implementing a thoroughly planned reverse logistics management program can help easily manage this backwards flow of products. Proper implementation of a well-designed reverse logistics management strategy significantly enhances customer satisfaction.
Fraud and Counterfeit Returns in Reverse Logistics
Reverse logistics, while essential, is often quite complicated and sometimes tricky. Even in the case when customers return merchandise in a legitimate manner, retailers have to deal with multiple issues, such as malfunctions in manufacturing, damaged or defective packaging, products that are past their expiration dates, or products past their time of demand such as winter wear in the summer. While legitimate returns are easier to handle, they do not make up the entire returns process.
Reverse logistics means also dealing with fraudulent returns, such as receiving an actual ordered good that has been replaced with other goods, missing parts, or worn and used items. To deal with all of this and more, reverse logistics personnel need to be trained properly to cater to the varying needs of the different returned items.
Despite the complexity of managing returns, it is essential to remain accessible and professional and make the entire process seamless for the customers. Efficient reverse logistics require businesses to request information from the customer regarding the reason for return to enable future improvements and identify fraud. However, requesting this information needs to be done efficiently and intuitively; otherwise, customers may be driven away. Once reobtained, these products need to be further processed in varying ways depending on their properties. Some products can be refurbished, other repackaged, offered as a bonus, disassembled, and reassembled into newer products, put on sale, given in charity, or disposed after treating in a prescribed manner.
Here’s some insight into how you can enhance your customers’ experience and loyalty through some tried and true reverse logistics strategies.
Live Up to Customer Expectations
The constantly increasing market competition has made it more crucial than ever to achieve customer satisfaction. Customers have elevated expectations from businesses, desiring personalized services and highly accurate and thorough experiences. Therefore, to gain customer loyalty, logistics providers need to gain a better understanding of customers’ expectations and extend the provision of these personalized experiences even after the purchase has been made. This means that order fulfillment should not end with order delivery but instead last until customer satisfaction has been ensured. If not, a seamless return must be arranged for the customer.
Enhance Productivity and Efficiency
An efficient reverse logistics management program requires massive amounts of effort paired with innovative ideas to enhance the efficiency and productivity of a business. This requires the customer support personnel involved to have a thorough understanding of the resources required at each step of the journey for smooth implementation. A successful implementation can lead to reduced overall costs, enhanced productivity, quicker service cycles and improved customer experience.
Cut Down Overall Expenditures
As discussed above, the correct implementation of reverse logistics management strategies can cut down the overall expenditures of a business. Manufacturing businesses dealing with products that can be recycled or refurbished can greatly benefit from reverse logistics, both in terms of enhanced productivity and lesser resource wastage. Having the right strategies to manipulate and use returned items increase the company’s budget to better process future returns.
Create Adaptable Inventory Management
An adaptable system is one that is capable of readjusting to the evolving demands of targeted customers. Efficient reverse logistics management requires a flexible approach to enhance customer satisfaction, and intelligent reverse logistics strategies are perfectly adaptable and more capable of understanding customer needs. This leads to faster replacements and returns, lesser inventory carrying costs, and higher profits.
Respect the 3 R’s
An alarming number of products that continues to accumulate in landfills annually requires compliance with elaborate and product-specific disposal procedures. The 3 R’s of Reduce, Reuse, and Recycle must be religiously followed. Items such as food that is close to expiration should be donated to charity centers or drives should be set up. Other goods past-expiration should be discarded properly to prevent any potential hazard.
While achieving customer satisfaction through a gratifying experience is a driving force behind reverse logistics, so should striving towards environmental sustenance. This increased focus in improving reverse logistics and enhancing the customer experience by investing greater efforts and more resources has significantly reduced the rate of returns for many businesses thus far.
Omid Torkian earned his degree in Business Administration from California State University, Northridge in 2000. His experience in finance led him to work on Wall Street from 2000-2003 for the Syndicated Loans division of Deutsche Bank.
In 2003, he returned to Los Angeles to start his own eCommerce business. He has since become an award-winning seller on multiple marketplaces, built a 20 million dollar business from the ground up, and ventured into other businesses since 2011 including real estate, mom and pop ice cream shops, and most recently, ShipBots.
Leveraging his expertise in the retail and logistics industry, Omid co-founded ShipBots, a 3PL provider headquartered in the heart of Los Angeles that specializes in affordable and efficient order fulfillment services and solutions for DTC businesses of all sizes so they can focus on marketability and growth.
As the CEO and co-founder of ShipBots, he has recognized the need for more streamlined 3PL services especially for entrepreneurs just starting out in eCommerce. His greatest passion is sharing knowledge and helping his team, clients, and others excel and grow.
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