Returns in the E-Commerce Retail Supply Chain – MD Logistics
In recent years, a rise in e-commerce sales has led to an increase in the amount of items returned. This increase in returns creates a challenging situation for retailers and an opportunity for their 3PL providers.
Q: How does the reverse logistics process work?
A: 3PL providers engineer returns solutions that are specific to their customers, keeping their brand and supply chain needs top of mind.
Retail vs. E-Tail
Retailers who sell their products online, known as e-tailers, require a different returns process than that of brick-and-mortar stores. Typically, e-tailers are not the ones returning product to the DC; it is their customer, the end consumer.
3PLs work with their customers to define ‘return rules’ for their product when and if it is returned to the warehouse. Once these rules are defined, returns can be accepted at the DC.
Accounting for Returned Items
The returns process is initiated by the customer notifying the retailer they wish to return an item. The retailer then generates a Returned Merchandise Authorization (RMA), informing the 3PL that a return is on its way to the warehouse. All returns must be received into the warehouse management system (WMS), allowing the product to physically and systemically be accounted for.
Reconciling to the RMA
Upon receipt, the 3PL provider acknowledges the return has arrived at the warehouse and reconciles it to the RMA. The 3PL is then able to determine if a replacement product or part is needed. Timely action during this stage results in a satisfying customer experience.
Q: What are the parameters for assigning product disposition?
A: Product is inspected based on ‘return rules’ and is dispositioned accordingly. 3PLs work with their customers to define parameters for assigning product disposition guidelines specific to both product and brand. Additionally, some product categories must follow federal return guidelines.
Return to Stock
Typically, ‘return to stock’ product is classified as ‘B level’ and separated both physically and systemically in the warehouse and WMS, ensuring the correct version of product is picked based on the type of order.
In some circumstances, product components are recovered once a return arrives at the warehouse and saved for later use. This is referred to as component reclamation. These parts are normally stored in the warehouse for further use as a replacement part or used to complete an incomplete product.
While some products can be returned to stock or refurbished, many cannot and must be disposed of accordingly. 3PL providers work with their customers to further define parameters for careful product destruction, many times identifying hazardous materials that must follow a strict disposal protocol.