Education Workshop: Reverse Logistics
Authored by SMC³ on August 17, 2021
The Untapped Potential of Reversing the Final Mile
The ecommerce boom has been well-documented. More than ever before, consumers have demonstrated a willingness to spend their money online. While every brand will take this trend as a promising sign of future business growth and greater opportunity to penetrate new markets, it also brings with it considerable transportation challenges.
Final mile delivery is the ecommerce challenge receiving the most attention in the post-pandemic world, but it isn’t the only challenge shippers must overcome if they want to maximize their return in the ecommerce ecosystem.
As a part of the SMC³ Connections 2021 supply chain education conference, Tony Sciarrotta, executive director of the Reverse Logistics Association, Nicholas Isasi, EVP at DM Transportation, and Austin Jones, director of transportation at Bargain Hunt, explored how businesses can engineer final mile reverse logistics solutions that can improve ROI, support stronger customer experiences and demonstrate forward-thinking social responsibility.
Standard reverse logistics practices don’t make sense for ecommerce
Picture this: you want to order a new pair of shoes, but you’re not sure what size to buy. To give you a chance to compare a couple sizes and make sure you really like the fit, you decide to order three different sizes—intending to keep the pair that fits the best and send the other two back.
This all-too-common scenario makes reverse logistics much more critical to bottom-line ROI in ecommerce pricing and freight transportation strategies. When you factor in the fact that traditional returns often cost roughly 59 percent of the sales price, it becomes clear shippers need to find a better way to process returns and reintroduce them to the supply chain market.
“When you factor in freight handling, loading and shipping on top of the reduced price you can now get for that item in a resale or wholesale outlet, it gets expensive,” Jones said. “Handling is something you don’t often think about—that labor costs the same amount whether it is coming or going.”
So, what are shippers to do?
All three panelists in this discussion highlighted hyperlocal return strategies as one way to unlock reduced costs and improved brand optics.
According to Isasi, it’s still important for brands to pick up their products when a customer wishes to return it. The alternative, allowing customers to keep these products in order to save on shipping costs and waste, could have disastrous effects on brand equity in the marketplace, he says.
“This is where hyper localism really can come into play,” he said. “You should go pick it up, but by keeping it local and being able to donate it or liquidate it locally—that protects your brand and helps to control cost as much as possible.”
Beyond the potential savings gained by shortening the return trip, hyperlocal strategies also support a less wasteful circular economy.
Said Sciarrotta: “It ensures that things come back and something better is done with them than just throwing them away. Making it easier for customers to access and use your product—those are green practices that are sustainable. It is about thinking circular, not just being ‘green.’”
To learn more about emerging reverse logistics strategies, watch the session on-demand from SMC³’s Connections 2021 supply chain conference. If you didn’t register in time for Connections 2021, you can still create a registration and watch!