Developing a Reverse Logistics Strategy to Handle Increased Demand in Returns

Create a reverse logistics strategy to handle returns in peak demand times

When planning your peak season transportation strategy for the holidays, it’s essential to include reverse logistics management. That’s because returns spike after the holidays.

Overall, returns have grown from $264 billion in 2012 to $761 billion in 2021. This pattern has come from e-commerce, a marketplace where the return rate is more than 20%. The holiday season accounts for increased purchasing and spending, which also results in more product returns. After last year’s record-breaking holiday buying season, consumers returned about $158 billion in goods, a 56% increase over the previous year.

This year’s e-commerce spending is not expected to be as high, which leads to a conclusion that the volume of returns will diminish. Yet, the past couple of years were abnormal due to the pandemic, so comparing them is not necessarily the best strategy. It’s better to compare to shopping and returns for the rest of the year.

Due to holiday purchases, we can still expect peak-season shopping with a return hike this holiday season. In response, shippers should anticipate high returns and have a solid reverse logistics strategy. Not only does a good plan for returns help meet demand, but it also improves your customers’ experience.

What Is Reverse Logistics?

Supply chain logistics transport goods from point A to point B. Yet, that’s not the end of the story. Businesses also need to consider returns or recycling, with a plan to get those same goods from the end customers back to the sellers or the manufacturers. This supply chain management process is known as reverse logistics.
This process is important because it maintains an efficient flow of goods, reduces costs, creates value, decreases risk, and completes the product life cycle. This is part of the circular economy idea of following traditional logistics, turning the end into a closed-loop supply chain. Gartner Research reports that 70% of businesses anticipate investing in a circular economy.

Your returns management process is especially important during the holiday peak shipping season. Most holiday returns now happen in December before the new year starts. Since shippers are holding these sales earlier, peak season is full of returns.

Customers may return Black Friday/Cyber Monday items during peak shopping and shipping season. That means shippers need a clear strategy to manage these early returns concurrent with deliveries.

Tips for Reverse Logistics Success

An e-commerce reverse logistics strategy should not be an afterthought. Returns are expensive and can throw off a streamlined supply chain. Shippers need to plan in advance to maintain profitability, growth, and customer satisfaction. These tips can help guide your reverse logistics process:
  • Think about your returns policy and state it clearly.
  • Consider packaging before returns happen.
  • Keep space ready for returns in-store or in the warehouse.
  • Anticipate high returns as online shopping and expectations increase during the holiday peak season.
  • Take stock of lessons learned during previous holiday seasons.
  • Develop a solid reverse logistics strategy with technology interoperability in mind.
  • Integrate the TMS with the WMS, ERP, and other supply chain systems to gain better visibility into data, stay proactive and automate certain returns processes.
  • Support excellent customer experience with improved visibility into returns status.
  • Rely on solid technology to run automated business processes and rules.
  • Consider outsourcing inbound deliveries of returns to a third-party location to free up valuable resources.

How a TMS Enables a Better Reverse Logistics Strategy

Technology helps businesses streamline reverse logistics. In particular, a transportation management system (TMS) provides these benefits:
  • Seamless Integration: Integrate the TMS with other logistics systems for a better workflow and improved reverse logistics process.
  • Data Insights: TMS technology can collect and analyze reverse logistics data to clarify carrier performance.
  • Payment and Return Predictability: Improved visibility through the TMS allows shippers to track return rates, fees, and profit/loss measures.
  • Improvements to Returns: A good TMS creates a customer-centric process leading to better preparation for managing returns and carrying out reverse logistics tasks.

Calculate your potential Saving While Using an enterprise TMS

Plan Ahead for Returns and Reverse Logistics

Shippers must prepare for returns spikes during the fourth quarter of 2022 and the first quarter of next year as customers are returning holiday purchases. Much of the returns process is carried out simultaneously with the delivery of holiday purchases. Some of it extends past holiday buying as well.

A good peak season logistics strategy incorporates holiday buying and associated return spikes. This means shippers need a good reverse logistics strategy as part of an overall logistics strategy. Technology can simplify your processes to make reverse logistics management work in your favor. MercuryGate TMS can help make your returns process a delivery differentiator.

Learn how reverse logistics fits into MercuryGate’s delivery management.

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