5 Reasons All 3PL Warehouses Should Provide Returns Management
As a sales channel, ecommerce has been chipping away at brick-and-mortar business-to-consumer (B2C) and business-to-business (B2B) sales for years now. When the COVID-19 pandemic emerged, ecommerce became the go-to source for pretty much everything. Online sales grew by 44% in 2020, and are expected to maintain growth in the double-digits for the foreseeable future.
The rapid rise of ecommerce has come with 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. To meet their customers’ ever-changing expectations, ecommerce sellers need a robust, tech-enabled reverse logistics process focused specifically on product returns.
Here are five reasons why third-party logistics (3PL) warehouses should step in to help their customers manage the complexities of online returns:
- Gain access to an entirely new revenue stream. For 3PLs, the benefits of managing reverse logistics and returns goes beyond just being able to provide additional services to customers; it also adds an entirely new revenue stream and differentiates the 3PL from competitors that have yet to make this move. By offering returns management to that existing customer base, a 3PL can increase its revenues by 10%-30% (based on the average online return rates).
- Help customers make more money. Offering returns processing also helps customers improve their own profit margins, conversion rates, and customer satisfaction. All table stakes in the modern ecommerce selling environment, these value-adds can help position a 3PL as a go-to provider in any business condition. 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.
- Develop stronger customer relationships. By providing an expanded service offering, 3PLs can develop close-knit integrations with customers and subsequently expand their foothold with those clients, who know that not all logistics providers offer returns processing and management. Because not all 3PLs have this capability, it’ll be difficult for your end customer to “shop you out.” It’s also a great opportunity to gain a competitive edge and further secure your current business pipeline.
- Leverage modern technology platforms. For best results, 3PLs need an automated, cloud-based platform that’s focused specifically on managing the reverse logistics process. Existing warehouse management systems (WMS) won’t cut it, as they were designed to manage order fulfillment not the extremely high volume of returns being generated on the ecommerce front. Instead, 3PLs need a cloud-based Returns Management System (RMS) to manage every aspect of returns, repairs, and after-sales care.
- Navigate the perfect storm of market challenges. With a robust, cloud-based RMS in place, 3PLs can help their customers increase their own net profits by up to 5% at a time when the “perfect storm” of ecommerce and pandemic forces are directly impacting their bottom lines. Knowing that end customer satisfaction is a key point of the strategic differentiation in the market, brands are seeking new ways to increase their net profitability. And, 3PLs are in a prime position to manage the reverse logistics process and let their customers do what they do best: run their growing businesses.
Major Benefits & Zero Drawbacks
By automating and optimizing reverse logistics processes with AI and machine learning, for example, ReverseLogix helps brands achieve a significant reduction in operating costs and increased customer satisfaction. It also provides advanced visibility and helps 3PLs adhere to complex service level requirements (SLAs)—and all from one centralized platform.
ReverseLogix’s platform provides AI-enabled, real-time dashboards for tracking all steps in the process—including crediting the end customer for the return and getting the goods back into stock quickly. Even better, ReverseLogix won’t interfere with any existing technology or infrastructure, easily integrating with other in-house systems (WMS, ERP, etc.) which means 3PLs can add returns processing without worrying over the impact on their forward logistics operations.