How to turn reverse logistics into good CX
In the realm of commerce, a gap exists in the market – along with a major opportunity – particularly FOR large-scale item returns, within the domain of consumer-to-business (C2B) reverse logistics. This underserved segment represents huge potential, offering substantial benefits from both a customer and business-to-business (B2B) perspective.
Returns aren’t great for consumers or vendors. For shoppers, they mean dissatisfaction and the hassle of having to post something and wait for a resolution. For vendors, it means lost sales and products, as well as double shipping costs.
Also, certain product categories are more complex to process when returned. Clothing returns – which are high, due to bracketing, in which customers buy several sizes – take around three times longer to inspect. Returned items are often damaged and unsellable. An estimated 2.3 million tonnes of goods end up in US landfills annually.
Product returns are huge and growing. Online sales now outpace in-store sales for returns, US data shows. Total value of returns for online and offline sales reached $743 billion last year. For every US$1 billion in sales, the average retailer incurs US$145 million in merchandise returns. The National Retail Federation has also identified a spike in fraudulent returns.
A Statista study shows the most returned online purchases by category in the US, as of last December, were clothing (24 per cent), followed by bags and accessories (17 per cent) and shoes (17 per cent). In Australia, they were also clothing (17 per cent), followed by bags and accessories (11 per cent) and shoes (10 per cent).
Benefits of the ‘inverse supply chain’
Managing C2B reverse logistics effectively can unlock a range of customer experience benefits and opportunities.
- Enhancing CX: Streamlining return procedures, including arranging pick-ups, packaging assistance and clear instructions, can reduce friction and enhance satisfaction. The returns process is also an opportunity to strengthen communication channels with customers.
- Building trust: Providing customers with real-time tracking and status updates on their returns can instil confidence and trust in the brand. Knowing the exact status of a return eases concerns and fosters a positive perception. Tailoring return options based on individual customer preferences can create a sense of being valued and encourage repeat business.
- Cross-selling and up-selling: When a customer returns a product, it creates an opportunity to offer them alternatives or upgrades. This can increase both customer satisfaction and sales. Additionally, offering loyalty points or incentives for returned items can encourage future purchases.
- Feedback loop: Returns provide valuable insights into product performance and customer preferences. The data generated through reverse logistics can be a reference point for business insight. By analysing return patterns and reasons, B2B partners can harness this data to identify trends, improve product quality, and enhance customer service.
- Sustainability points: The sustainable disposal or refurbishment of returned items can be a selling point for environmentally conscious customers. Emphasising eco-friendly return practices can align with corporate social responsibility initiatives.
- Optimising logistics: From a B2B perspective, large-scale item returns present opportunities for B2B partnerships to optimise logistics operations. Collaborations with logistics companies, recycling centres, or third-party service providers can improve efficiency and reduce costs.
It’s estimated that returns volume will grow to more than $1 trillion in merchandise annually over the next several years. Strategies to minimise returns include getting to know customers much better, so they make more accurate purchases in the first place.
But even reducing returns is not going to eliminate them. Organisations must find a way to deal with C2B returns efficiently and effectively. The C2B reverse logistics segment, especially for large-scale items, represents a substantial customer experience improvement opportunity. Visibility and predictability into the supply chain across vendors, transport providers, distribution, stores and dealers are key to unlocking actionable insights.
By addressing this gap in the market, businesses can not only enhance C2B customer satisfaction but also forge valuable B2B partnerships.
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