What Is Reverse Logistics and How Do You Implement Returns Management in B2B eCommerce?

1. WHAT IS REVERSE LOGISTICS?
2. KEY ASPECTS OF REVERSE LOGISTICS
3. WHY IS REVERSE LOGISTICS IMPORTANT?
4. CHALLENGES AND SOLUTIONS
5. RETURN MERCHANDISE AUTHORIZATION (RMA) IN B2B ECOMMERCE
6. HOW VIRTO COMMERCE CAN HELP WITH RETURNS MANAGEMENT

• Initiation of a customer's return request (via call, email, chat, or ticket)
• Shipment of the returned product to a fulfillment center.
• Processing the returned order, shipment of a different product, or issuance of a refund
• Documentation of the reason for the return
• Product audit and quality control testing
• Repair, recycle, or return the item to stock

A well-organized returns management system allows your business to reuse as much of the product as possible, which in itself prevents the returns from turning into a total loss. Because reverse logistics involves the same steps as forward logistics – that is, customer support, transportation, inventory management, and so on – they both require similar efficiencies. By facilitating the way products are reincorporated into your supply chain, you'll reduce costs, save money, and please your customers.

Let's outline a few benefits of streamlined reverse logistics below:

• Efficiently managing your reverse logistics process contributes to significant cost savings. From reducing transportation expenses to reselling or recycling returned items, recouping some of those costs will contribute to better profit margins.
• The way your business handles returns directly affects the customer experience. By offering several convenient return options, minimizing your customers' wait times, and making refunds easier to obtain, you'll significantly improve customer experience, which, in turn, leads to increased customer satisfaction and loyalty.
• Streamlined returns management leads to a faster turnaround and can help speed up the process of repairing, refurbishing, and reusing the returned items. This cuts down on the need to purchase more stock.
• Researching reverse logistics can help you identify better ways to reuse, resell, and recycle returned products that would otherwise end up in a landfill. In addition, sustainability programs improve your brand's image and reputation and increase customer appreciation and loyalty.

But even before COVID and recent international developments, reverse logistics has been sliding into a treacherous phase, owing largely to impulsive consumer behavior. Overzealous shoppers have gotten into the habit of ordering everything in the dozens, whether in different colors, sizes, or other specifications, then keeping a few things and sending the rest of it back.

Although, thankfully, the situation is inherently different for B2B, the lack of adequate transportation affects both B2B and B2C sectors. According to trucking.org, if current trends continue, the driver shortage could double by 2030. And transportation is only one part of the problem.

Returns are not easy on the back end, either. When the goods are received, businesses need to inspect, repackage, or recycle and then send some of it back to the shelves. That takes labor, which is also in short supply right now.

To address the number of returns, consider introducing new technology, such as CQP or 3D imaging, to help customers configure or visualize their products. One common return reason, whether in B2C or B2B, is that something was not as described or pictured. High-quality images and better descriptions in your online catalog or web pages will help reduce the number of returns. Fewer returns mean fewer expenses, a healthier planet, and happier customers.

Ensuring a smooth reverse logistics operation requires careful, controlled returns management that includes the collection, transportation, inventory management, quality control, return to availability, and recycling or proper disposal of the item. Such precision can only be achieved through automation. Therefore, it's crucial to have robust technology that integrates and automates essential business functions.

To begin with, it's important to have a reliable warehouse management system (WMS) to manage inbound and outbound logistics and provide real-time analytics. WMS, in turn, needs to be able to smoothly integrate with an enterprise resource planning (ERP) system. This way, an ERP paired with a WMS will allow you to easily track returns, monitor the movement of goods, issue credits, and update customer records through integrated systems.

Similarly, a robust inventory management system allows you to keep tabs on stock and manipulate business operations to stay ahead of changing circumstances and input data.

In the next section, we'll look at one particular technology that addresses returns management in ecommerce.

An RMA allows customers to ask for a refund, repair, or a replacement and enables sellers to resolve those issues within a single reporting system.

Apart from standard functionality, the RMA system can also help you identify areas for improvement and find ways to resolve and minimize inefficiencies.

While the details might differ, an RMA typically includes the following steps:

The customer initiates an RMA request by filling out an RMA form online. Ideally, there would be a list of acceptable reasons, such as a broken or wrong unit, so the customer can easily select an applicable option. Providing options to choose from can help you structure data and identify recurring issues more effectively. With that said, there must be a field for customers to add their own text if they wish to do so. It's also important that your customers state what action they would like the store to take, which could be a refund, replacement, or repair.

The store approves the RMA. Once the store receives a return request, it needs to be approved either automatically or manually. Upon approval, the store needs to provide customers with specific directions about how to send the product back. Some stores prefer to issue a free shipping label with a specific RMA number that customers can attach to the product for its shipment back to the store. This also makes it easier for the store to match the received package with the customer's account.

The store receives and inspects the item. A good RMA system is able to connect the item received with the RMA number automatically and notify the customer about the receipt of the item. In case the RMA number doesn't match the product, it will be further inspected manually to identify any patterns that will reduce the number of returns in the future.

The store settles with the customer. Finally, the store will refund the purchase price, repair it, or send a replacement. The RMA system allows the store to send regular updates to the customer about the status of the return and give them an idea of when to expect their refund or replacement. As soon as the store provides resolution to the customer, the RMA request gets closed, either by the store or the customer.

The bottom line is that reverse logistics is an integral aspect of ecommerce fulfillment. With the proper systems, such as RMA, and effective procedures in place, optimized returns management can significantly improve customer experience and satisfaction, not to mention business operations and revenue.