Take Control of Reverse Logistics

Cut costs, meet consumer expectations and manage increasing returns by optimizing your returns management strategy. Your customers will thank you!

No one likes returns, especially consumers

Retailers, suppliers, logistics providers and consumers can agree on one thing, returning items can be an unpleasant experience. Not anymore. With some simple tweaks, your reverse logistics process can delight your customers and your bottom line.

Let us show you how you can improve your returns process, starting at the beginning of the shopper’s journey:

Audit your e-commerce site

Whether they buy online or in-store, most consumers will consult the product details on your e-commerce site before they purchase an item. If the color in the photo is wrong, the sizing chart is off or shipping dates are misrepresented, the order is destined to be returned. Often, you can avoid a return altogether by providing the customer with the accurate details needed to make a better decision, before they add the product to their shopping cart.

Improve returns strategy with better e-commerce item descriptions.

The fix: Ensure that item details are accurate. Retailers should partner with suppliers to frequently update media, item attributes and availability.

To address this challenge, you can:

  • Use SPS Assortment to communicate item details and inventory data (especially for drop-ship suppliers). Suppliers should send this data daily or weekly depending on the season and product type.
  • Analyze sales data. Are certain products returned more than others? This may point out a problem. These should be the first items audited, as a new product video or updated item details could make all the difference.
  • Monitor shipping accuracy. When items arrive late, the likelihood of a return increases. Retailers should check their drop-ship EDI transactions to see if any vendors are consistently off on ship dates. Retailers can work with vendors to correct this issue.

SPS Commerce Assortment has been providing an easy way for suppliers and retailers to exchange product details. The solution is a central location that meets the in store, e-commerce and distribution center formats and requirements of all trading partners. We help to be sure your product data is up-to-date, accurate and helpful to the consumer.

Manage drop shipping and reverse logistics

Online shopping is on the rise, especially during the COVID-19 pandemic, meaning more direct-to-consumer or drop-ship orders. With increasing drop ship and all e-commerce orders, it’s important to ensure you have a solid reverse logistics strategy in place with your trading partners. Keep in mind that consumers who are unable to touch and try-on in stores will typically order more sizes or options than they plan to keep. Drop-ship returns become a huge variable within your inventory management and an extra shipping cost, so you need to be ready.

Here’s what you need to do to make it easier on your business and the consumer:

Retailers

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Monitor your drop-ship vendors’ shipping dates. Late orders for customers mean more returns.

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Analyze return rates by product, across any timeframe.

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Provide detailed branded return labels and packing slips, and ensure return instructions are accurate and easy to follow.

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Be alert to when returns happen and why items were returned (damaged, too big, etc.).

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Track costs associated with returns, including shipping, storage costs, losses from damaged items and more.

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Communicate with return center (if used) to understand expenses and lead times for consolidated returns.

Suppliers

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Meet shipping deadlines. (It’ll also boost your standing with your retailers!)

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Measure the impact of returns by retailer and by product to drive better decisions.

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Track how well customers are using and following the return process, any concerning trends should be communicated to the retailer to improve labeling and return instructions.

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Communicate return volumes in a timely and consistent manner, automate if possible.

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If returns go to a return center, tap into their reports or updates so you can better manage inventory levels.

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Review the returns policy in your vendor agreement, understand the terms and how they impact your bottom line. (Hint: You could have to pay your retailer due to your mistakes)

Fulfillment

SPS Commerce Fulfillment is ideal for drop shipping. It makes managing the higher order volumes easier. It alerts you when a shipment is at risk of missing a shipping date, lets you quickly shop for the best carrier rate (and you can print the label without going to another system), and invoices multiple orders in seconds.

Analytics

SPS Commerce Analytics provides reporting on returns, return rates and gross sales. You can assess the impact of your returns by product and across any timeframe. When return windows fluctuate, especially during the pandemic, it’s important for all parties to know the financial impact of returned items.

Put the customer first, even with returns

The returns management process must be simple for the consumer. They expect nothing less. But, easy for the customer, doesn’t always mean easy for trading partners. It requires supply chain collaboration between retailers and suppliers. Retailers rely on the support of suppliers to delight the customer. When trading partners come together and configure a returns process that puts the customer needs first, it makes a big difference. While it is important to define the details that do not involve the customer, such as where the returned product will eventually go, who pays for what, how damages are managed, etc., these are secondary to providing a positive customer experience.

The fix: Develop a clear reverse logistics plan that encompasses all areas of your supply chain. If there are gaps between a retailer and a supplier’s roles, problems will arise. And, if the confusion carries over to the consumer, it’s guaranteed to be a disaster.

How to stick with the plan:

  • Stay connected. Keep every party informed of the plan, from the warehouse to the merchant to the supplier. The plan should address how items are to be resold at the store (if possible), restocked in the warehouse, shipped to a return center or sent to the vendor. All parties should monitor return codes to identify and address mid-season issues.
  • Automate trading relationships. Using SPS Community, retailers can set requirements, onboard suppliers and use proven processes. We ensure that everyone (and their data) needed to serve and delight the customer is connected and ready for the next order or return.
  • Focus on the consumer. They want simple return instructions. Ensure that your branded packing slip includes accurate and easy return instructions. Provide options and encourage easy in-store returns whenever possible to drive new purchases. During COVID-19, you may want to consider adding an option for customers to use your curbside or drive-up area for returns.
A supply chain returns management process should be focused on creating positive customer experiences.

SPS Commerce Community helps automate information exchange with all your trading partners, and SPS has hundreds of retail experts ready to help make it easier. We work with retailers and suppliers to achieve 98 percent or better adoption of EDI, analytics, item data management strategies. These automated, data-powered relationships fuel a supply chain that meets consumer’s needs and efficiently addresses returns.

Bring in experts to support your plan

Reverse logistics takes planning, store and warehouse space and knowledgeable staff. Some retailers and suppliers identify returns management as a core competency, but many do not. The alternative is to partner with a third-party logistics provider (3PL) who knows reverse logistics inside out.

A great addition to any reverse logistics strategy is incorporating a 3pl into your supply chain.

The fix: Partner with an experienced returns 3PL. They can take care of your returns using established processes to manage inventory, damaged items and much more. Rely on their expertise and gain back time to focus on other areas of your business.

Some tips to find the right help:

  • Experience is important. 3PLs likely work with other retail businesses just like you. They know the expectations. They can offer advice and have a team ready to make it all work. Find one that already works with your trading partners.
  • Location matters. Find a partner located in the regions you serve so returns are processed quickly with minimal shipping time.
  • Assess their scalability. As your business grows, can this partner serve your needs? Ask about their automation, staffing and locations to see if they are scalable (as switching 3PL providers can be a headache).

SPS Commerce works with hundreds of 3PLs and can help you quickly identify those with the expertise and locations to match your needs. We can jumpstart your search and provide recommendations based on their performance in our retail network with companies just like yours.

Ready to improve your returns management process?

SPS has proven EDI, item data and analytics solutions to improve collaboration and streamline the returns. Contact the experts at SPS Commerce for a free consult.

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