4 Reasons Every Third-Party Logistics Warehouse Needs a Returns Management System

Two workers moving boxes in a warehouse

When third-party logistics providers (3PLs) manage returns for their customers, they take that task off those customers’ plates while giving the logistics provider a new way to differentiate itself in the marketplace. Doing so also gives 3PLs an entirely new revenue stream that—when supported by a modern, automated 3PL reverse logistics processing platform—can enhance their revenues by 10-30 percent.

Unfortunately, many 3PLs miss out on these opportunities due to their aging warehouse management systems (WMS) and other disparate solutions. Not only was WMS not built to manage the modern-day influx of returns, but it’s also incapable of handling the many different facets of the returns management process.

Ditch Your WMS for a Modern, Cloud RMS
Here are four more reasons why every 3PL should replace its WMS with a modern, cloud-based returns management system (RMS):

  1. The returns avalanche isn’t going away. The rapid rise of ecommerce has driven a disproportionate increase in product returns. By industry estimates, 30% of all items ordered online are returned, versus just 8.9% of brick-and-mortar purchases. Taking advantage of easy and free returns has become a natural choice for customers, many of whom take these points into consideration before hitting the “buy” button.
  1. Most 3PLs are falling behind in this area. A newer requirement accelerated by pandemic-driven online buying, efficient returns management is an area where many 3PLs are falling short. Focused on their forward logistics—and for good reason, in today’s fast-paced selling environment—these providers often fall short when it comes to managing the roughly 30% of items that are guaranteed to find their way back to their customers. This uptick in online returns has opened up an entirely new revenue stream for logistics providers, who have a real opportunity to differentiate themselves from competitors that are still using WMS and disparate solutions for returns processing management.
  1. Be the go-to 3PL in your field. By thinking beyond “picking, packing, and shipping” products, 3PLs can effectively add value for their customers by providing a high-value service that those companies can’t manage effectively themselves. Offering returns processing also helps customers improve their own profit margins, conversion rates, and customer satisfaction. These value-adds can help position a 3PL as a go-to provider in any business condition.
  1. WMS was never built for returns management. Designed to manage order fulfillment and not the extremely high volume of returns generated on the ecommerce front, WMS also doesn’t cater to the whims of customers who want to be able to log into a website, get a returns merchandise authorization (RMA), print out a shipping label, and send the box back to the merchant. One recent ReverseLogix 3PL customer was using a leading WMS solution to run its returns processes and suddenly found itself paying out large sums and waiting months for system changes to be implemented and rolled out by its vendor. In a world where business needs change daily, waiting 6-12 months for these changes to happen can be a death knell for a logistics provider. By implementing ReverseLogix, the same 3PL got a purpose-built, flexible, unified returns management system that is now helping the company meet its customers’ ever-changing needs.

With a cloud-based RMS in place, 3PLs can efficiently orchestrate every aspect of their customers’ returns, repairs, and after-sales care. By automating and optimizing 3PL reverse logistics processes with AI and machine learning, ReverseLogix helps 3PLs significantly reduce their operating costs and adhere to complex service level requirements (SLAs)—all from one centralized platform.

RMS also helps 3PLs help their own customers increase their own net profits by up to 5%, and right at a time when companies across the board are being asked to do more with less. As the only RMS provider that offers a true end-to-end reverse logistics management system, ReverseLogix takes a holistic approach to a 3PL’s current operations and enhances those activities with advanced, AI-enabled technology.