4 Things You Probably Don’t Know About Reverse Logistics

An understanding of the reverse logistics process can increase a company’s profitability.

If your business has completely figured out the reverse logistics process—the flow of goods back into your business from returns—congratulations. But if you haven’t quite optimized that process yet (or even started to try) you are definitely not alone. Many companies invest a lot of time, money, and effort into streamlining the supply chain and forward logistics to get products into the hands of customers but fail to do as much for the back-end process when something needs to be returned. Unfortunately returns, especially for online stores, are an inevitable part of your business so it’s important to understand reverse logistics.

1: Reverse Logistics is More Than Just Returns

If you think “reverse logistics” is synonymous with “returns”, you should know that there is much more to it. It starts when a customer initiates a return, and includes tracking that package back to your store or returns center, issuing refunds or store credit, repairing or replacing the item (for warranty items), keeping customers informed about the status of a return, restocking for resale if possible, or disposing of a product that cannot be resold. The ability to track every aspect of this process from start to finish, and optimize it at every step, gives you a better chance of recouping some of the lost profit from returns and keeps customers happy.

2: Calculate the True Cost of Reverse Logistics

The cost of reverse logistics is more than just subtracting the amount of a sale when someone returns an item to your store. You need to take into account:

  • Credits or refunds
  • Processing costs
  • Logistics costs (shipping, storage)
  • Asset depreciation, if applicable

If you are not actively working to streamline the entire process, each piece of the reverse logistics puzzle can diminish your ability to make up lost revenue from the original sale.

3: Returns Don’t Always Mean Lost Profit

Fortunately returns don’t have to mean lost profit. If you have a good process in place and a reverse logistics platform, you can often recoup some of the cost of returned items. In some cases that means re-shelving it and selling it at or near full price. In other cases you may take an item apart and sell the parts, or refurbish and sell at a lower price (such as defective electronics). Items out of season could be sold at a significant discount or clearance to at least recoup the cost of goods sold, while others could be sold on secondary markets or recycled.

4: Reverse Logistics Platforms Can Help

Companies that don’t have a good process in place don’t have to create it from scratch. Reverse logistics platforms from ReverseLogix can provide an off-the-shelf or customizable solution to streamline your operations immediately. Contact us today to schedule a demo.