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5 Reasons why Reverse Logistics is important for your Business

In this pandemic-stricken world today, e-commerce business has grown leaps and bounds as compared to the traditional retail businesses.

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5 Reasons why Reverse Logistics is important for your Business

Author: Vikrant, Head of Operations

Importance of Reverse Logistic

In this pandemic-stricken world today, e-commerce business has grown leaps and bounds as compared to the traditional retail businesses. Last-mile deliveries have become an important norm due to changing consumer habit from shopping in a store to conveniently getting your orders with tap of a button. According to Brian & Company, the e-commerce sector in the MENA region is expected to reach US$ 28.5 billion by 2022, which is a major shift from its US$ 8.3 billion valuation in 2017. This upsurge in the industry has led businesses to update their processes and look for convenient solutions in their logistics processes.

However, e-commerce business is maturing with every passing day and are coping to retain the customers with increased customer satisfaction and process optimization. While it is quick and convenient to order online but customers are facing issues over sizes, quality, damages and look and feel of actual product in online shopping due to which the return of shipments has posed a major challenge for all e-commerce companies. With every return there is a customer dissatisfaction, delay in receiving actual order, held up payments and a few more negatives to count upon. While the companies are consistently working on improving the quality and user-friendly interface to reduce the return share, but the primary importance remain in the quickest possible return process.

The return process is a sheer wastage in terms of cost for the company in the value chain and thus needs to be looked at very carefully. Companies have realized that an efficient reverse logistics strategy within the supply chain encourages profit-generating opportunities for companies. Here are a few more reasons why reverse logistics are so crucial to businesses.

Improved Customer Loyalty and Retention

Improved Customer Loyalty and Retention

While return is always associated with customer dissatisfaction, with effective process it may be converted into an opportunity to build a better customer loyalty. The longer a reverse pickup takes more is the agony added to your customer whereas a quick return attempt increases the level of trust in the customer and pushes him/her further to stick to the platform. Many companies have now moved to a no question asked policy for the returns just to boost the customer’s confidence.

Many companies have started seeing the return percentage as an increasing trend of their relationship with the customers and it is a very alike development with what happened with Fashion retails when they started capturing footfalls as a happy number where customers were encouraged to try the clothes as much as possible.

Improved Inventory Optimization

While improving every step of the supply chain, an effective reverse logistics solution can significantly impact the asset recovery of a business and, as a result, positively contribute at an operational level as well. From the time a customer raises a return request to such time the product has been returned to the seller/company it stays as a dead inventory in the chain causing wastage in cost and inventory. So, apart from customer satisfaction a quick return also adds the opportunity of the return product to be resold or treated as per the status.

Improved Transparency in value Chain

Reverse shipments allow a company to closely monitor the quality of the product and high return rate acts as an alert to relook into the quality. Also returns due to sizes issue acted as a catalyst to improvisation with features like size charts, size guides and virtual trials. Such continuous improvements in the UI helps in attracting better traffic on the platform. Also, companies can identify the quality sourcing partners with simple data analytics to reduce returns.

Improved ROI and sustainability

A cost-effective reverse logistics system can not only help the company reduce it’s return cost, but the speed of returns can further help in customer retention and improved revenue. Reverse logistics sometimes is being considered as a dead cost and is not prioritized by the e-commerce companies, but one must remember that while half of the customer experience is drawn by the web interface and products, balance 50% of the consumer life cycle consists of the fulfilment and logistics.

Operational Optimization

With return and replacements becoming an unavoidable menace in the ecommerce business it is important to look at a cost effective and optimized reverse logistics solution. There are several 3PL logistics companies who have developed significant expertise in reverse logistics, especially in MENA region companies like Jeebly provide as quick as single day return facility. In our next blog we will also understand how some of these companies have developed effective network clubbed with their first mile fleet to offer a cost-effective solution to the e-commerce companies.

Along with this, there are many more reasons which go a long way in proving the necessity of a streamlined reverse logistics strategy for a business. So, it is important for e-commerce companies to effectively choose their 3PL partners who have strong and credible network to perform their to and fro deliveries.