FUTURE OF REVERSE
LOGISTICS

Returns aren’t going away, they’re only growing

Insight #1: Know what you have—and why

Transparency throughout the supply chain is crucial for adapting quickly to changes and optimizing costs.

Data-driven supply chain forecasting boosts efficiency

More ecommerce brands are leveraging data insights to forecast demand and optimize efficiencies. More than half of the 22% of merchants that use inventory management software save at least 5 hours a week, and inventory management technology can help merchants reduce inventory carrying costs by an average of 30%.

Making use of fulfillment tech like inventory management software and RFID scanners can provide you with valuable data that can inform your supply and demand strategy. In an ideal world, you’re distributing the right amount and types of products to each distribution center, and your shoppers never have to deal with out-of-stock issues.

Recommendation: Integrate your returns data to augment your inventory planning and inform how you handle out-of-stock scenarios on the shopper-facing side.

Reverse logistics are crucial for supply chain management

Managing returns quickly and affordably is key for inventory management and cost effectiveness. Around 30% of ecommerce products are returned, with $573 billion in product value estimated to be returned in 2022.
When you optimize your returns costs, you can transform returns from a cost center to a profit center.

An automated returns solution is no longer enough to differentiate your brand from other offerings in the market, and if you are still handling returns manually, you’ll likely face much steeper reverse logistics challenges, higher labor costs, and greater levels of frustration from your shoppers.

Recommendation: Know how to take advantage of your automated returns solution—enable rate-shopping, utilize advanced features that incentivize your shoppers to spend more during an exchange, and more.

Rely on a distributed fulfillment strategy

Rather than ship from a central warehouse, many merchants are relying on a 3PL or group of partners to manage a distributed fulfillment strategy, enabling fast and affordable shipping to shoppers in any region. 86% of merchants that use a 3PL say that having advanced logistics support allows them to provide shoppers with better customer support, and 75% say that using a 3PL reduces their overall costs.

By developing a multi-warehouse strategy, you’ll be able to get broader geographic coverage for your brand, enabling faster and cheaper shipping to all of your customers. You’ll be able to easily and automatically move inventory from one warehouse to another based on need or anticipated demand in one location. You can also use 3PL order and shipping data to help you understand when to discontinue products or add more.

Recommendation: Partner with a 3PL and logistics partners to streamline logistics and reverse logistics for cost savings and for better visibility of your inventory.

Insight #2: Focus on ease and cost-effectiveness

Free returns are coming to an end, but shoppers have higher expectations than ever before. Keeping your sights trained on what is cost-effective for your brand, without sacrificing shopper convenience, is going to be crucial for reverse logistics.

Convenience is paramount in the returns process

96% of shoppers would buy again from a brand that provides a “very easy” or “easy” return process. Shoppers are most satisfied (73%) with returning via dropoff point, without the need to re-pack the item, and are least satisfied with returning by mail (56%).

Our own 2023 Consumer Report found that a significant majority (70%) of shoppers report a willingness to pay for a more convenient, “premium” return experience, such as a scheduled pick-up from their home that doesn’t require them to repack the item. In fact, 50% of shoppers have already paid for a premium returns experience.

Recommendation: Provide many return options to balance shopper expectation & costs.

Know when to leverage free returns, and when to charge for convenience

Shoppers have high expectations around shipping and returns. 75% of shoppers expect shipping to be free even on orders under $50, and 63% would like to be able to use curbside pickup. Shipping speed is important too: 42% of shoppers expect 2-day shipping—at minimum. However, the age of free returns is swiftly coming to an end—and how you decide to balance the expectation of free returns with starting to charge for returns is going to play a big part in how your shoppers see your brand.

Studies also show that shoppers are just as concerned with choice during the returns process. To that end, a self-service returns portal can empower shoppers to customize their returns options, including the choice between self-service mailers or using a drop-off location to drop off your product without repacking it. In this way, you can leverage the fact that you’ll need to start charging for returns by offering different shipping options at scale. You might also consider offering premium return offerings, such as scheduled at-home pickups, for an additional fee.

Recommendation: Charge for returns, but provide a more premium experience—and save free returns for your most valuable shoppers as a thank you.

Look beyond traditional warehouses for distribution solutions

Ecommerce merchants are making the most of new trends in fulfillment to deliver fast, efficient logistics and reverse logistics networks. In addition to using a variety of geographically distributed warehouse hubs, merchants are also making use of “microfulfillment” centers in urban areas, which can easily facilitate same-day shipping and returns within those cities.

They’re also upgrading their technology to support improved fulfillment and reverse logistics: an automated goods-to-person system can be 6x more efficient than a manual one. Forty-eight percent of ecommerce merchants are adding or upgrading their parcel/LTL transportation management system (TMS) while 36% are automating parcel sortation, and/or utilizing software for rate shopping (32%) and parcel analytics (29%).

Recommendation:
Embrace a more agile fulfillment strategy in 2023.

Insight #3: Embrace sustainability

For merchants, focusing on your brand’s impact on the environment is both a business and an ethical decision, one that your shoppers are paying more attention to in 2023.

More shoppers consider sustainability when making purchase decisions

Shoppers, especially Gen Z, want to support brands that care about the earth.

When weighing up which products to buy, 85% of customers are prioritizing sustainability
in their purchasing decisions, and one-third of customers are willing to pay a premium for
sustainable products. Beyond focusing on how products are manufactured, it’s also
important to consider returns from the angle of sustainability: nearly 3 million tons of returns end up in landfills annually.

Recommendation:
Analyze your returns processes for sustainability, and implement cost-effective measures that help you and your shoppers minimize their carbon footprint as much as possible during returns.

Retailers are exploring a range of options for repurposing and recycling

Shoppers pay attention to your returns process, and 57 percent of them say that having a sustainable returns program is an important factor in their online purchase decisions.

Many merchants are looking for opportunities to upcycle returned or used products. By partnering with third-party solutions that can refurbish or resell their products through a secondary marketplace, they can recapture revenue while avoiding waste generation. Some retailers are also partnering with donation centers or pet shelters to get a second life on used returns or items that can’t be resold.

Recommendation: Offering resales options during the returns process can help mitigate the effects that returns can have on the environment.

Proactively manage returns to save money and be more sustainable

Not all refunds are worth returning—by analyzing returns from a sustainability perspective, you can save costs and eliminate landfill waste.

You can use conditional logic to determine the right reverse logistics path for any item: return, recycle, or let the shopper keep it. And with the advent of drop-off locations for returns, merchants can consolidate multiple shoppers’ returns into a single package and shipment, saving costs on return shipping.

Recommendation:
Use returns data to help streamline your inventory and sales initiatives, and in turn, minimize returns where you can.

Want to know more about the

Future of Returns?

Future of Returns

Is your brand ready for the Future of Returns? Here’s what to know.

Future of Shopper Experience

Keep your best shoppers happy—especially during a return.

Future of Merchant Growth

Returns are an opportunity for your brand, not something to dread.

2023
BENCHMARK REPORT

Learn where your brand stands—so that you can plan for the future.

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FUTURE OF REVERSELOGISTICS