What is Reverse Logistics?
Reverse logistics is a supply chain management framework used to send product customers back to manufacturers. Companies can use their reverse logistics to optimize product returns to minimize loss.
Significance of Reverse Logistics in an E-commerce Shipping and Delivery
Reverse logistics management is a key step in e-commerce to increase the net profit and retain customers. Among the benefits of reverse logistics in e-commerce are:
- Cost reduction through asset utilization: Faulty products are one of the main reasons for order returns. A well-optimized reverse logistics system can allow a seller to reduce costs. Once a product is received, it can be inspected, repaired if required, and sold in a secondary market.
- Better branding: A well-supported process for product returns allows a brand to repair the damage to its reputation. As customers pay good attention to a brand’s efficiency in dealing with such issues, reverse logistics plays a huge role.
How Reverse Logistics Works and Prerequisites for Reverse Logistics
Acquiring the product serves as the only requirement for reverse logistics. It might vary from company to company, but every process should have the listed steps as a minimum.
- Inspection: Product faults are inspected as per the complaints.
- Refurbishing: The identified faults are mended, and the product is remarketed.
- Discarding (optional): If the product is beyond repair, it is disposed of properly.
Use Case With Reverse Logistics
Consider a phone company that has received a complaint of a faulty phone screen from a new customer. The company procures the phone from the end user and runs an inspection. After the phone screen is fixed, it is then repacked and remarketed. In contrast, the customer was given a new replacement or a refund.
With an efficient reverse logistics process like this, the customer is left impressed and finds the company reliable for future purchases.