Starting an online shopping portal or a marketplace? Stats say one in three of your sold products will be returned. You need to set up a reverse logistics channel and implement cost saving measures. 89% of customers say the return policy of a product affects their purchase decision.
Reverse Logistics face different challenges from Forward Logistics.
Forecast Hindrance
Returns unlike in forward logistics, often start at many places across the country and end up in one place. It is difficult to predict who will return or the origin of return. This makes forecasting budgets, logistics or revenue difficult to forecast.
Excess Time
Returned products take more time to be ready for sale again. They have to be picked up, inspected, repacked and stored/returned to the seller often shipped in freights. In some cases the prices will change in case the original packaging isn’t achieved or there are damages/missing accessories to the product.
Fraud
There is always that shady group of people in every society. They order a product and return a different product or the seller ships a product that’s not the one mentioned in the website & of course, damaged products & fraud payments. Returns are obvious in these cases.
Neglect
Industry has long neglected the returns in the past but the stakes are high now with increased costs and growing number of online shipments. There is lack of a sophisticated system to manage this mammoth online shipment return chain.
Government Laws
Many countries require you to have a return policy for goods purchased online. This makes it difficult to limit the returns. People misuse it. They buy things they don’t really want as much or for temporary use. This increases the return rate. There is a lack of zero return policy for some products.
International Shipments
International Return Shipments cost more in time and money. Often the big players store the product at distant locations until the product is ordered again by someone else. Though this limits the cost, it’s still a dent in their budget.
Reverse logistics is a big challenge for e-commerce and this is an industry that is growing at staggering rates in developing countries. Tackling this problem early and putting an efficient system in place is necessary to keep the customer’s trust. save costs and maintain margins.
Author: Sunil Thomas