Ecommerce Mag, France: Cognizant’s Assistant Vice President of Retail Consulting Makes a Case for Retailers to pay Attention to Reverse Logistics

“Many retailers have long emphasized agility and cost-efficient movement of freight to stores or customers,” writes Karl Swensen. “However, they often neglect reverse logistics, resulting in missed opportunities for the entire consumer goods supply chain. While this may appear to be a simple process of moving goods from customers to returns centers, retailers face numerous operational challenges.” Excerpts:

“The multi-channel model—which enables consumers to buy anytime, anywhere—has significantly impacted the retail industry and given rise to the following reasons why retailers need to focus on reverse logistics.

- Increasing rate of returns. Customer returns historically range between eight and nine percent of total retail sales, according to the National Retail Federation and Retail Equation. This multi-fold upsurge brings returns management to an unprecedented position of importance within retail operations.

- Demand for flexible returns. Omni-channel retail ushered in a new set of customer-dictated rules. The retail industry must adhere to a "buy anywhere, return anywhere" policy, and provide the same return options across channels. This unique challenge to provide flexible return options creates new opportunities for retailers to streamline policies and systems.

- Compliance challenges. The proliferation of returned goods increases emphasis on compliance. Laws dictating proper handling, shipping, and disposing of merchandise govern retailers. Returned goods pose a problem, because item condition dictates their transportation and classification, which federal agencies closely control and monitor. In addition, increased focus on product and food safety amplifies the number of recalls. A recall incident can cost manufacturers millions of dollars.

- Returns are becoming mainstream. The widespread attraction of budget-conscious shoppers has created an opportunity for retailers to recapture value from returned items. This increase of returns occurs in many product categories, including apparel, furniture, electronics, and household items.

Reverse logistics is no longer a cost center. A well-planned reverse logistics strategy provides competitive advantage to grow a business across multiple channels. With clearly defined policies and processes, retailers can drive efficiencies to reduce costs, increase returned item value, manage risk associated with certain products, and make reverse logistics a profitable part of the organization.”

Click here to read the article in French.