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The future of reverse logistics: how technology is changing the way we think about returns

The future of reverse logistics: how technology is changing the way we think about returns

The growing return rate in the retail industry has made management returns and the reverse logistics process a critical function for companies. Technology is playing an increasingly important role in streamlining the return management process and improving the customer experience, both for online and brick-and-mortar stores.  

The benefits of using technology for returns include: 

  1. Increased efficiency: automating the returns process can reduce the time and effort required to manage returns. According to Accenture, companies that automate their returns process can reduce processing time by up to 50%. 
  2. Improved accuracy: real-time visibility into the status of returned products allows companies to better manage inventory and reduce the risk of lost or stolen items. Deloitte found that companies that use technology to track returns can reduce the incidence of lost or stolen items by up to 30%. 
  3. Enhanced customer experience: providing customers with a seamless returns experience allows them to initiate returns online, print shipping labels, and track their returns. PwC research revealed that 86% of customers say a positive returns experience is important when deciding whether to shop with a retailer again. 
  4. Data-driven insights: valuable data on the reasons for returns allows companies to identify trends and root causes and make improvements to product quality and customer service. According to McKinsey, companies that use data analytics to optimise their reverse logistics processes can reduce costs by up to 10%
  5. Reduced costs: technology can help companies reduce the costs associated with reverse logistics processes, such as shipping, restocking, and refurbishing. Bain & Company found that companies that optimise their reverse logistics processes can reduce costs by up to 20%. 

There are, however, challenges of using technology for reverse logistics, including: 

Reverse logistics can be challenging for companies due to various technological factors. One of the most significant challenges is integrating new systems with existing legacy systems.  This can be difficult and expensive unless the vendor has proven integrations with a wide range of third-party applications, from ERP and warehousing to the e-commerce stack. Another key challenge is ensuring data security and privacy, as technology can provide valuable data on the returns process, but this data must be protected to prevent data breaches and maintain customer privacy.  

Finally, some customers may be hesitant to adopt new technology or may prefer traditional methods of returning products.  Companies must provide clear instructions, a slick experience, and support to ensure that customers are comfortable using the new technology. 

What does the future of returns look like?  Here are our top predictions: 

  1. Returns will become increasingly flexible: most merchants offer immediate refunds for returned goods, which impacts cashflow.  Forward-looking merchants are today encouraging customers returning goods to exchange them for other items – via the same returns page.  Thus, returns are helping to increase sales. 
  2. Customer experience will come to the fore: As customer expectations continue to rise, we can expect to see more companies investing in slick, easy-to-use returns platforms.  More and more businesses will make the link between easy returns and customer retention. 
  3. There will be a greater focus on sustainability: With growing concerns around sustainability and the environment, we can expect to see more companies prioritising sustainable practices in their reverse logistics operations. This includes initiatives such as reducing waste, recycling materials, and minimising carbon emissions. 
  4. Omnichannel returns will become the norm: as the dividing line between in-store retail and e-commerce becomes blurred, we can expect to see more retailers offering omnichannel returns, allowing customers to return products through multiple channels such as in-store, online, or via mail. 

Returning products from the customer’s doorstep to the warehouse and ultimately into another customer’s hands, can be an admin-heavy job.  The right returns solutions can automate the entire process, saving money, and improving revenues and retention at the same time. 

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