Reverse Logistics: How to Turn Failure into Opportunity

The words reverse or return have gained a negative meaning over the years. But it isn’t always so.

Think of returning customers. Companies across the board adore the sound of the word return in that particular context. I know we do.

Although it’s easy to see the appeal of that phrase, the same isn’t true for the word reverse in the context of logistics.

For years, reverse logistics has been regarded as a bad term, meaning failure for many who work in last-mile delivery especially when demand exceeds capacity.

But it doesn’t have to be. And in fact, it isn’t.

In today’s competitive market with its intelligent consumers, that term has taken on a completely different meaning. One that represents untapped potential and idle opportunities.

All you have to do is treat it as such.

Then, you can capitalize on the many benefits of reverse logistics that lie hidden beneath its meaning.

Let’s take a look at what is reverse logistics and how it can benefit your customer experience and the bottom line.

What Is Reverse Logistics?

Reverse logistics is the process in delivery operations that controls the return movement of orders from their final destination. Its main purpose is the capture of value or proper disposal of failed deliveries.

That’s the definition of reverse logistics, but what does it mean?

Simply put, it’s the logistical operation that covers a company’s return policy. If a product is faulty, damaged, or lost, or the customer rejects the delivery for any other reason or fails or is unable to collect it, reverse logistics are responsible for returning the item and ensuring the customer remains satisfied.

In recent years, it has become an integral part of delivery service operations. And although many businesses see it as a costly measure for ensuring customer satisfaction, its benefits increase the value of the company in more ways than one.

Reverse Logistics and Customer Service

Why is reverse logistics so important for last-mile delivery? It all comes down to customer service.

Some deliveries might be faulty, damaged en route, or mistakenly arrive at the wrong address. In these situations, it makes sense to allow returns and keep customers happy.

It’s also an excellent business practice. Allowing customers to return orders aligns your service with the modern consumer expectations.

Customers might not want to return deliveries, but they will want to have that option available to them. It lets you secure a positive experience and incentivize them to buy more from you.

Think of it like this. If a retailer offers hassle-free returns on clothes, for example, a customer will make more orders to try out every item because they aren’t afraid of losing money. But once the order arrives customers are also less likely to return it, due to consumer psychology.

First, they have had a chance to assess the product and estimate for themselves if the product really does bring value to their life. And in the case of clothes, if they fit and feel good, the customer is likely to buy all of them.

More importantly, they will have had the opportunity to touch the product, which leads them to establish a personal connection with the object. So, it becomes much more difficult to part from it.

Additionally, the process is a money-saving system for companies when it comes to purchased goods, as well.

Service teams can use it to collect reusable supplies, such as getting refillable containers upon return visits. This can be a more sustainable, and less expensive way of reducing production costs, as well.

For a customer, a good return policy is all about comfort and convenience. For a reverse logistics expert, it’s all about providing the best possible service efficiently and at the least cost.

If they can live up to those expectations then the process of returning items can have a massive impact on profit.

How Reverse Logistics Affects the Bottom Line

When it comes to the reverse logistics process, it all boils down to numbers. How effective are the operations, as opposed to the cost of running them?

But one doesn’t have to look far to see its impact on the bottom line.

As mentioned before, a good return policy keeps customers happy and motivates them to buy more products. And there are many good examples of reverse logistics that do just that.

According to recent statistics, the cost of running Amazon’s reverse logistics operations, including all other outbound shipping costs, amounted to almost $16.2 billion.

However, the company was able to rake in global revenue from e-commerce in the range of almost $233 billion between 2015-2018 alone.

When you take a step back down from huge enterprises, small businesses might think that it’s financially out of reach. But that’s until you consider customer loyalty and how it can drive income.

One thousand true fans will buy any product you sell. But to obtain their loyalty, you need to provide the best product, as well as the best service.

If you go out of your way to ensure a fast returns policy that can quickly replace any damaged deliveries, your customers will love you for it and become those true fans.

But recent advancements in technology have also made it possible to minimize the costs of running reverse logistics operations. So, that’s the direction companies should take if they want to offer refunds and returns to generate customer loyalty and maintain a positive bottom line even as a small business.

How Technology Makes Reverse Logistics More Efficient

Delivery management software has improved the productivity of last-mile delivery logistics at all levels and across many industries. From route optimization to ePOD in environments like food and beverage distribution or field service operations.

Since these tools benefit forward logistics so much, those positive effects would inevitably spill over into reverse logistics. And they have.

Control of the delivery process has empowered both distribution businesses and their field operatives. Drivers can quickly access their mobile apps and report problems as they happen, while teams at the office can react as soon as they hear something from the field.

Visibility, on the other hand, has enabled those teams to quickly assess available resources and scramble them to meet the new situation whatever reverse logistics model is at play.

This rapid flow of information also benefits the customer. Customer service representatives can quickly contact them and fix the problem, either by ensuring a new delivery (if the order is lost or damaged), or a refund of the cost of the order.

In both cases, the delivery management software lets them provide more accurate ETAs so customer satisfaction remains intact.

We have everything you need to start improving your delivery.