Checked Your Reverse Logistics Recently?

Beth Cox

Updated · May 11, 2001

A new report, urging businesses to improve their reverse logistics, says that the value of returned merchandise purchased online is expected to reach an estimated $5.8 billion in 2005, representing 90 million items.

The Jupiter Media Metrix research report contends that as the volume of returns increases, retailers who concentrate solely on improving the returns processes will miss significant cost-saving opportunities.

To realize the financial benefits, Jupiter analysts said, companies must maximize the value of reclaimed goods by improving their entire reverse logistics systems, especially the collection and analysis of consumer data.

“Numerous outsourced solutions have emerged to address consumers' concerns for increased convenience and speed in dealing with returns,” said Darren Bien, a Jupiter analyst. “While these solutions address consumers' dissatisfactions and desires, retailers need to … focus on the cost-saving benefits of an improved reverse logistics system that includes three key elements: data collection, redistribution of goods and effective reporting.”

So what's an online retailer to do?

The first step in creating an effective reverse logistics program is to collect the data necessary to understand a consumer's reason for the return. Jupiter said retailers must collect well-structured and consistent data regarding the reason for the return and the condition of the product. Companies that fail to do this will be unable to analyze trends in product categories and consumer segments and will be unable to reduce or eliminate certain types of returns.

Also, companies are advised to maintain policies that treat all return reasons uniformly, or they risk damaging the quality of the data they collect. Why is that important? Jupiter analysts said they found that after one retailer changed its return policy to pay the shipping cost for damaged goods only, returns due to damage increased dramatically while ordinary consumer behavior-related returns decreased accordingly.

“Companies need to learn more about why their consumers are returning goods,” Bien said. “The data they collect will be the only way for them to reduce returns, identify trends, and most importantly, quickly redistribute the goods.”

Reprinted from InternetNews

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  • Beth Cox
    Beth Cox

    Beth Cox has been a well-known keynote speaker and author as well as a business and technology advisor. She helps companies improve their business performance, better utilize data, and understands the implications of new technologies, such as (AI)artificial intelligence, big data, blockchains and the Internet of Things.

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