Why is reverse logistics still a painful process for e-commerce brands?
E-commerce has forever changed the shopping experience for consumers. Anything a consumer desires can be at their doorstep with a single click and can be returned or exchanged with another. While the process is simple for most of us, it is not the same for e-commerce players.
Delivering a product to the customer’s doorstep can be a cakewalk. The reverse logistics process is where the complexities begin, putting e-commerce players through their paces.
According to industry estimates, almost 30% of products sold through e-commerce platforms are returned for one reason or another, occupying a significant part of the supply chain.
According to a study by tech logistics startup LogiNext, the average manufacturer spends between 5% and 20% of their revenue on returns. Although the customer returns figure varies by product category, platform and customer destination, generally when it comes to segments such as apparel, fashion, technology, off-the-shelf apparel, women’s and men’s apparel, and footwear, a business has to endure higher reverse logistics requirements.
This is often accompanied by complaints about products not being similar to those shown in the picture, different sizes, receiving a damaged product, or even just the customer not liking it in person. .
E-commerce players are burdened with the process of returning sold products to the seller through the supply chain, as it drains their resources, does not yield instant financial rewards, and even the often underpaid debt collectors reluctant to participate in the process. because the experience can be unpleasant. Additionally, informal practices in the Indian supply chain and logistics ecosystem create inefficiencies in the process, making it more complex.
So reverse logistics – a painful process for e-commerce players requires a little extra motivation to execute.
But when it’s so complicated, why do e-commerce players offer reverse logistics?
A necessary evil for business
Although unpleasant for sellers, product return is a feature that online sellers can no longer live without.
It has become a way of life for e-commerce platforms, people would be hesitant to buy as many goods as they currently do if e-commerce platforms don’t offer returns.
Reverse logistics shortcomings can cost the seller their goodwill. Although the process is taxing, it is also an opportunity to add value to the product so that a better version of the item can be put back on the shelves. Ensuring customer satisfaction with reverse logistics, ensuring they have received their money, taking their feedback and working on it can be beneficial and help increase sales.
The process that guarantees efficient yields
- When offering reverse logistics, an effective and robust returns management policy and process should be implemented. A strong policy in place ensures some form of access control to alert the manufacturer if returns are genuine. With the help of quality control (QC), a company can validate genuine claims and avoid accumulating losses.
- On top of that, there is a need to invest in manpower and infrastructure when it comes to reverse logistics. Return authorization – when a retail business initiates the return process – needs to be strengthened with more manpower and infrastructure support.
- Customer reimbursement has a major impact on working capital. Therefore, a company should always have a financial cushion for such cases. However, the size of the buffer may vary and depend on different companies and is a strategic decision to consider beforehand.