The Critical Role of Analytics in Your Reverse Logistics

Analytics plays an important role in operations, and should be part of reverse logistics too.

Analytics has received a lot of attention, especially in recent years as the volume of data that businesses can gather, store, and access continues to grow. You probably use “big data” to analyze a lot of things related to your business operations and forward logistics with a goal of improving operations, cutting costs, and reducing waste. When it comes to your reverse logistics process, analytics is just as important, and failing to use analytics can put you at a big disadvantage—either because it could cost you customers or because it could cost you money.

Don’t Let Reverse Logistics Analytics Be an Afterthought

After someone makes a purchase in a retail store, about 5 to 10 percent of those items get returned, but when you move to online sales, anywhere from 15 to 40 percent of all purchases are sent back. Major retailers and online giants like Amazon often provide free shipping, which provides an added incentive for customers to return items. This also has a financial benefit to the company, since people are far more likely to make a purchase if they think they can return it easily (especially if that return is free), and they are more likely to make repeat purchases from a retailer that has a simple returns process.

Unfortunately all those returns can add up to a big bottom-line expense if your company is not handling them well. For many online retailers, the whole process of reverse logistics—from customer initiation to return shipping, warehousing, repair or restocking, and disposal—is less of a well-oiled machine and more of an afterthought. That often leaves companies with returns processes that are not optimized, and end up costing a lot more than they should.

Using Analytics to Bridge the Cost Gaps

While returns are inevitable in any retail business, they do not have to be a significant drag on your bottom line. The key to reducing your costs is to have a better understanding of what is happening within your reverse logistics process, the using the data to optimize your operations and limit returns.

Minimize Returns

Identifying items that are more likely be returned, and the reason for the return, allows you to make adjustments in your sales and forward logistics process that can limit returns. For example, creating more accurate size charts for an item that is frequently returned for being too small, or switching manufacturers or suppliers for items that are returned with complaints of defects.

Reduce Fraud

Fraudulent returns cost companies a lot of money, but having a reverse logistics software program that tracks sales and returns can quickly help you verify the validity of a return. You can also use your analytics to track the frequency of fraudulent return requests to spot patterns and help you go after serial offenders.

To learn more about the reverse logistics software that ReverseLogix offers, and how it can provide better analytics for better business decisions, contact us today and schedule a demo.