Returns from Black Friday purchases are typically high – nearly half. Making the process easy for customers is essential to maintain a good brand image. Saving money on reverse logistics services is even more important. Retail Reworks can turn it into a strategic advantage.
Introduction
Consumers are always eager for Black Friday because of the exceptional deals on their holiday shopping. However, it’s estimated that almost half of those items are quickly returned, to the tune of $173 billion. That’s up 28% over last year.
Trends also indicate that returns, which once tended to occur over a period of a day or so, are now happening over a week or more. Reasons for returns include sudden impulse buys, unclear size options or changes in clothing sizes due to weight, or being unfamiliar with the brand.
The returns process cost retailers $816 billion in 2022, and those numbers are only going up each year. Processing, labor and warehousing, and carrier costs are also going up. It’s essential that retailers use efficient returns management services. Done the right way, the returns process can become a strategic advantage in maintaining profits and customer satisfaction.
What is Reverse Logistics?
Reverse logistics is the step in the supply chain in which a product is returned to the manufacturer or distributor. The product may be returned because a customer wants or needs to replace it. It can also be returned for repair, recycling, or disposal.
Different kinds of returns require different methods of handling. For example, the steps involved in replacing an item for a customer or repairing it are different than those needed for recycling or disposing of a product that’s reached the end of its lifecycle.
Being able to efficiently manage this “upstream” process in the supply chain can make a difference in profits as well as customer satisfaction and brand image.
Why Reverse Logistics is Key to Black Friday?
Black Friday means a huge volume of product returns. It’s estimated that nearly half of Black Friday purchases are returned; they may have been impulse buys, the sizes are wrong, or something similar. Making the returns process easy for a customer is essential to maintaining brand loyalty.
Reverse logistics must also take into account the costs involved in shipping, restocking, or repair. Sustainability factors (such as packaging) are also important in this time of heightened environmental awareness. Proper packaging is also needed to prevent items from becoming damaged during the returns process, thus creating more waste.
Having effective return management services in place before Black Friday will help a retailer turn this potentially-cumbersome process into a strategic advantage that maximizes profits and customer satisfaction during this peak season.
Packaging Damage
If an item isn’t properly packaged during the returns process, the result can be a product that needs repair or even disposal. That’s lost profit, not to mention, creating more waste to end up in landfills. Having the right packaging as part of the reverse logistics process offers opportunities for savings, as well as sustainability.
Package Delivery Failures
Package delivery failures can result from address errors or someone not being home. Other reasons include damaged goods, safety issues or other things blocking access. For a business, package delivery failures lead to increased calls from customers asking about their package, costs associated with rescheduling delivery, refunds, and negative reviews. Having an efficient way to manage and track this process is key.
Free Returns and Bracketing
“Free returns” is a big selling point for retailers – but it costs something. “Bracketing” is a process in which a customer buys a lot of different items, intending to return some or most of them. With a “free return” policy, those costs increase exponentially. Efficient reverse logistics services must take these practices into account.
The Value of Reverse Logistics for Retailers
Having an effective reverse logistics system in place is invaluable for retailers. It can reduce the costs around the handling of returned goods, as well as storage and transportation. It allows them to get more profit out of an item. For example, a damaged item can be refurbished or repaired to be returned to another storefront for sale. Reverse logistics increases customer satisfaction as well as providing useful data on customer behavior. Other benefits of reverse logistics include making a company more sustainable with efficient recycling and disposable procedures. Ultimately, reverse logistics allows a company to better manage inventory and avoid either understocking or overstocking.
Customer Loyalty and Retention
Reverse logistics helps with customer loyalty and retention by ensuring that a retailer has the product(s) that they want when they want it. If they need to return it for any reason, having a process in place that makes it easy and problem-free for them pays off since they know they can count on your business to help them at every step.
Cost Efficiency
Having solid reverse logistics services in place makes a business cost-effective in many ways. It reduces time spent on customer service (“where’s my package?”) calls. It leverages transportation, packaging, and labor in ways that save retailers money. It can also streamline the process of recycling or disposal of products at the end of their lifecyle.
Sustainability Benefits
Reverse logistics offer opportunities to recycle or dispose of products in a responsible, sustainable way. Also, the packaging for returns can be made eco-friendly and transport costs can be better managed to save fuel and reduce the number of trips required.
Best Practices for Optimizing Reverse Logistics for Black Friday
Black Friday is a profit opportunity for retailers – at both ends of the cycle. Incorporate these best practices with reverse logistics to get the maximum out of this peak sales season.
First, it’s essential to plan ahead by having enough inventory and being able to manage it; you want a system where you can monitor inventory plus reintegrate an item back into the supply chain. That can mean a way to repair or refurbish it and sell it on another platform.
A clear return policy, including return shipping labels, makes the process simple for both the customer and expedites it among employees. Make your return policy a cornerstone of customer satisfaction.
Finally, among the benefits of reverse logistics is the ability to analyze customer behavior and returns to reduce costs going forward.
Plan Ahead
Make it a priority to put a reverse logistics plan in place before Black Friday. The effort now will pay off in having available inventory, streamlining returns, saving money, and generating invaluable data for use all year round. It will also pay off in better, cost-savings strategies for refurbishing, recycling, and disposal of goods.
Clear Return Policies
A clear returns policies, including the time frame for returns, associated costs, and eligibility criteria, streamlines the process. It builds confidence and trust among customers, helps avoid misunderstandings, and saves time. A clear returns policy also reduces fraud.
Collaboration with 3PLs
Working with a 3rd party logistics company (3PL) can offer your business warehousing and inventory management, real-time tracking of your inventory, additional labor such as picking, packing, shipping, and returns. It can help a retailer streamline their supply chain, free up resources, and tap new markets.
Conclusion
A solid reverse logistics system can help a retailer prepare for and get the most out of Black Friday. It allows tracking of inventory, efficiently working returns back into the system, greatly improving the customer experience (and thus, retention), and maximizing profits at every step of the supply chain process. That includes sustainable measures like recycling and disposal.
Reverse logistics offer valuable insights into customer returns and behavior, as well as data for cost-savings.
Retail Reworks offers reverse logistics software that can be customized to your business, no matter the size (making it perfect for scaling up). It saves your employees time that can be much better utilzed, and most importantly, reduces costs on this inevitable part of the sales process and supply chain.
