October 2012 | Commentary | Viewpoint

Return to Sender: Managing Reverse Logistics

Tags: Reverse Logistics, Supply Chain Management

Paul Galpin is Managing Director, P2P Mailing, +0 17 0889 9800

Most e-commerce businesses focus time and money on providing customers with efficient and flexible delivery options. Many companies, however, neglect to extend this attention to the return of unwanted goods.

While many factors influence customer loyalty, a well-run returns process drives repeat orders and improves consumer satisfaction. Eighty-five percent of consumers surveyed by research firm Harris Interactive report they will stop buying from a retailer if the returns process is a hassle, while 95 percent will return to the same catalog or Internet retailer if the process is convenient.

Despite these findings, some e-tailers—especially new ones—feel that because their business is small, a returns process is unnecessary. Other companies put a solution in place, but fail to give it the attention it deserves, forcing customers to endure inefficient and inconvenient processes.

Getting it Right

To encourage customers to make repeat purchases and promote growth, an efficient returns service is important to e-commerce businesses of all sizes.

Companies must consider three key factors to ensure their returns function will both meet customer expectations and be workable for their business. The returns process must be:

  1. Easy to implement. This factor includes being scalable so that as the business grows, the system can keep pace with increased traffic.
  2. Cost-effective. The service may be offered for free or at a cost. There may be import and duty considerations for international customers, so it's important that the system is set up to ensure regulations compliance and cost efficiency.
  3. Customer-friendly. View the process from a customer perspective to ensure it is easy to use and reliable.

The Cross-border Question

As many companies seek to expand globally, the subject of how to manage returns across borders becomes more prevalent. Here are some questions to consider when implementing a cross-border returns process:

  • How long will customers have to wait for a refund or replacement item?
  • How can customers track items in the system?
  • How can you monitor the rate of returns by market?
  • How can you manage stock re-integration?

Third-party Assistance

Because implementing or improving a returns process is complex, many forward-thinking businesses are partnering with third-party logistics providers to plan and/or administrate the returns solution. These solutions not only include current requirements, but also how the business might grow, and whether the returns process can sustain that growth.

The best providers tailor the solution to the business, customizing it to deal with national and regional differences where necessary. It should also be possible to integrate with existing IT systems and logistics providers to ensure minimal disruption and cost. Ideally, the returns process should be integrated into the e-tailer's Web site, so everything looks and feels the same to the consumer.

Ultimately, the returns process needs to be tailor-made and carefully planned from the outset, to ensure that it works for the business and for the customer.