Research shows that a whopping 95% of online customers buy from a brand again if they have a positive return experience. It just goes to show how crucial proper returns management is for any ecommerce brand.
Now, when it comes to managing returns, many online businesses have a tough decision to make: should they handle it in-house or outsource to a third-party logistics (3PL) provider?
In this blog, we'll dive into the challenges of managing returns in-house and explore why outsourcing can be the ultimate solution for achieving efficient and cost-effective return management.
Returns management or reverse logistics is all about managing, transporting, and reconditioning returned products. It's the behind-the-scenes process of handling customer returns and making sure everything runs smoothly.
The reverse logistics workflow in ecommerce starts when a customer asks for a return or exchange, either through an online portal or by reaching out to customer service. What comes next depends on each brand's own reverse logistics process, but it usually goes like this:
Effective reverse logistics is a big deal because it can help ecommerce brands cut costs, increase customer satisfaction, and keep their brand reputation intact.
The ideal solution for businesses would be to minimise returns as much as possible. But with the expectation and demand for hassle-free returns, eliminating returns through harsh return policies is not a good idea and can backfire on a brand.
The rise of online shopping has evolved return management from merely a logistics matter into an essential customer service. When shoppers cannot test or try products before purchasing, they expect a brand to assist them if a purchase isn’t right for their needs.
Reverse logistics is not only about managing returns. It is also about how quickly an online business can make returns happen. Long wait times for returns can ruin the post-purchase experience. This makes streamlined reverse logistics an absolute necessity for building customer loyalty.
Now that you've got a good handle on the concept of reverse logistics and why it matters, let's dive into the challenges of managing returns in-house and the perks of outsourcing these processes.
Handling reverse logistics in-house might seem like a good way to track return volumes, but it's important to recognise that managing outbound orders comes with different operational demands.
Nowadays, ecommerce customers have high hopes for a hassle-free return experience. They not only want returns to be free, but they also expect quick resolutions. After all, they want to continue their shopping journey without any obstacles. If your in-house reverse logistics process is struggling to keep up with these expectations, it's likely that dissatisfied customers won't consider purchasing from your brand again in the future.
According to research, reverse logistics requires an average of up to 20% more warehouse space than forward logistics.
Why? Well, when it comes to preparing an online order for return, things work differently. It all depends on whether it can be restocked right away, needs some reconditioning or repackaging, or if it has to be disposed of properly. In fact, each one of these outcomes requires its own workflow to make things easier and cut down on processing costs. So, if you do not have the right in-house infrastructure, managing returns can be a real challenge.
Reverse logistics isn't just about receiving returned goods and putting them back on the shelf. Even when customers perfectly follow your ecommerce return policy, there are still steps you need to take to prepare items for resale. This means repackaging, relabeling, repairs, re-kitting, and more. Handling all these value-added services on your own means higher costs and demands a sizable labor force in your supply chain.
When SKUs are constantly coming in and out of your fulfilment centre, it becomes really challenging for businesses to keep their inventory levels accurate. If you don't have a real-time inventory management system, you might end up mistakenly classifying items as sold out simply because the returned units haven't been updated yet. This can result in missed sales and lost opportunities to retain customers.
Outsourcing reverse logistics may not seem like an obvious choice to strengthen your supply chain. But let's be real here. The cost of handling returns alone is a solid reason why keeping reverse logistics in-house could be eating into your profits.
According to Optoro, a reverse logistics company, processing a return can end up costing around 66% of the product's price. And even if you manage to resell an item quickly, recouping all these costs is nearly impossible.
Why? This is simply because you, as an online business owner, can't escape the workflow of receiving, inspecting, reconditioning, and restocking returned items to ensure their quality control. If you don't want to burden your customers with these costs, you definitely need a smarter approach.
That's where outsourced reverse logistics comes in handy! By partnering with a 3PL logistics provider, you can cut down on your return expenses since they operate on a large scale. Rather than being tied up with managing return workflows, you can entrust that task to the experts and shift your focus to building your brand.
Here are some of the key benefits of outsourcing returns management to a third-party logistics (3PL) provider:
3PL providers are experts in ecommerce returns management. They've got the knowledge and experience that helps them handle the process better and faster than most businesses can do on their own. Plus, by partnering with a 3PL, you'll get in touch with trained professionals who know the industry inside out.
Outsourcing e-commerce returns management to a 3PL provider can improve customer satisfaction. With the help of technology and established returns management infrastructure, the 3PL can give accurate product information and promptly solve any issues that come up.
By outsourcing ecommerce returns, your business can experience faster processing time for returns, which leads to cost savings. This is because a 3PL provider offers wholesale carrier rates to manage shipping costs while ensuring your customers have an exceptional return experience.
When you team up with an experienced 3PL partner, they can provide you with a state-of-the-art technology platform. This means you can easily track returns and inventory, analyze data, and communicate with customers on a single platform. Moreover, the latest automation tools streamline the returns process and make it super efficient. This way, you can focus on what you're best at while the 3PL handles the returns like a boss.
At Eshopbox, we've got you covered when it comes to efficient return management. We make sure your revenue is recaptured in the following ways:
With Eshopbox's customer portal, your customers can effortlessly start refunds and exchanges. Plus, this self-service portal allows you to send automated return notifications to your customers through SMS and email.
Eshopbox automatically syncs your returns across multiple sales channels. That means our powerful return inventory tracking keeps you in the loop when returns are initiated on any sales channel with easy and hassle-free return labels.
With Eshopbox, you can effortlessly turn returns into exchanges on the customer portal. If your customers receive the wrong color or size, we make it easy for them to find the perfect replacement with just one click.
When products are returned to the fulfilment centre, Eshopbox conducts a quality check to see if they are ready to be sold again. The ones that are in good condition are restocked quickly, while the ones that need some work are refurbished. If any items are in bad condition, automated reports are generated to file a claim.
Marketplaces such as Amazon, Flipkart, and others let ecommerce brands request reimbursements for defective returns within a specific timeframe. With Eshopbox's auto-generated reports, you can easily keep track of and file claims by generating a Claim Filing Report (CFR).
Eshopbox can help you save costs and return fraud by setting up doorstep quality checks and making sure only valid returns go to the fulfilment centre. Plus, our infrastructure is equipped with CCTVs and cameras to capture the proof of return fraud.
Sometimes, products that are returned can get lost, stolen, or damaged. This can lead to significant losses. At Eshopbox, we have a standard workflow in place to handle these exceptional situations and minimize any potential financial impact. By effectively managing each defective scenario, we aim to maximize the value derived from the return journey.
Reverse logistics is a frequently overlooked stage of ecommerce fulfilment, but has a huge influence on the quality of the post-purchase experience. Poor returns management can result in customers choosing other brands in the future. This can result in high customer churn and stagnating growth.
By outsourcing reverse logistics to an experienced 3PL, you can stay confident about offering customers a superior return experience that maximises revenue and encourages them to return to your brand time and time again.
With Eshopbox, you get access to advanced automation tools, state-of-the-art tracking systems, and powerful analytics that will help streamline your return process and boost profitability. Know more about Eshopbox’s return management services here.