Consultants in Logistics

Return to Sender: Cost Effective Reverse Logistics

Return to Sender: Cost Effective Reverse Logistics

The Cost of Reverse Logistics

The boom in online shopping has fuelled an increase in courier deliveries but what about the returns? Some clothing retailers claim that 1 in 3 products ordered online are returned. With the inability to try before they buy, fashion consumers purchase multiple sizes or variations with the intent of immediately returning some of their basket.

In fact, according to a report in the Financial Times, returns cost retailers in excess of £60bn per year with the average returned item passing through 7 pairs of hands before being resold!

Returns & Refunds Regulations: The UK Law

Did You Know: The average returns lead time is around 10 days which is not bad when you consider that under UK distance selling regulations consumers can return items bought online, mail order or by telephone even if they aren’t faulty. The consumer has the right to inform the retailer that they want to cancel their order within 14 days of receiving the goods - with a further 14 days to actually return the items. Finally, the retailer must refund the consumer within 14 days of receiving the goods back. This can mean that retailers are potentially without the goods for at least 28 days, and therefore the revenue cannot be guaranteed.

Managing Increasing Returns

Returns are inevitable, so it is key they are dealt with efficiently, cost effectively and without further loss of value. Speed is of the essence. Whilst we all know that we should recover the goods quickly, it is often the case that returns are seen as lower value, lower priority tasks. This is a mistake. Yes, the revenue available from the sale is lost but retrieving the goods quickly will at least provide an opportunity to recover some of the value.

There are some cost-effective options:

  • If you have a vehicle in the area then the marginal cost of a collection could help. Otherwise shop around, use a carrier, and get the goods back quickly.
  • It doesn’t stop there: In order to process the returned goods cost effectively you will need to have started the process correctly:
      1. Issue returns authorisation to the customer;
      2. Issue some paperwork for the consumer or customer to place with the goods;
      3. Tie the two up in your systems and therefore enable immediate recognition when the goods arrive at your warehouse door. These simple steps will help to reduce the size of the costly returns pile in that forgotten corner of your warehouse.

Minimising the cost burden of returns

Minimise the lost revenue by placing unopened items back in to stock and repack items that are returned but look well-travelled and promote reconditioned items or even eBay seconds. Only dispose of goods that cannot be economically prepared for sale and, even then, shop around for someone who will buy the products or materials from you before you dispose of them. There will always be a buyer at the right price.

Making Returns Processes Part of the Main Event

In conclusion do not treat returns as a side show – they are every bit as important as the main event. We spend a lot of time ensuring the right goods are delivered on time and in full so why not be just as vigilant on the return journey? Speak to one of our warehouse consultants or contact us with your reverse logistics consultancy needs.

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