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The Reverse Logistics Landscape

Insights and actions from top companies to help any business tackle the growing demand for a seamless and sustainable product returns process.

Returns Are Shaped by the Digital Landscape

Customer returns play a big part in the growing e-commerce world. In a study commissioned by USPS®, Provoke Insights found that companies, regardless of retail channel and industry, are seeing an average return rate of 10%.1

Many credit the steady rate of returns—and the customer expectations it carries—to major e-commerce companies with lenient policies that make it simple to send items back, whatever the issue.

In fact, the study found that many customers return items for reasons beyond the company’s control.

Reasons for Customer Returns:

Changed mind after purchase1%
Product did not meet customer expectations1%
Product is broken/not working1%
Customer selected incorrect product/size1%
Product is no longer needed0%
Product was a gift0%
  • Graph Key:
  • Beyond a company's control
  • Within a company's control

Still, customers are increasingly demanding faster, cheaper, simpler and more convenient methods for returning goods they no longer want. If a returns experience isn’t seamless, a customer will abandon the company for another online competitor—and logistics teams are feeling the pressure to deliver in one shot.

The Big Challenge

Most logistics and supply chain professionals seem to understand the dire need for a positive returns experience. But many companies have no process in place to achieve success.

0% have no reverse logistics process in place at all

0% have no infrastructure dedicated to returns

0% have no reverse logistics process written down

0% have no standardized return policy

For this report, we spoke to leaders and key team members from large companies with 1,001+ employees as well as small/medium-sized companies with 1,000 or fewer employees to understand their outlook on and processes for reverse logistics.

Based on their insights, we concentrated on three top areas of focus that can help any business optimize its return policy and deliver a seamless returns experience: communications, shipments and warehouse facilities.

Communications

Communication is key, between both a company and its customers, and between departments within a company. Create uniform policies to improve the shopping experience, set customer expectations and better manage returns.

Action No. 1

Anticipate Reasons for Returns, and Prevent Them

Two of the top reasons for customer returns are products not meeting customer expectations (29%) and customers selecting the incorrect product or size (22%).

Additionally, our study found that 7% of companies provide inaccurate product descriptions, which goes hand-in-hand with these returns reasonings.

To prevent dissatisfaction, communicate a thorough description of the product for the customer to weigh in their purchase. This tactic has worked especially well for the retail industry.

Provide detailed information—including dimensions, fabrics, color variances and whether products run large, small, wide or narrow—to eliminate any avoidable uncertainty.

Product Description Tactics Used to Lower Return Rates

Percent of companies using each tactic to lower return rates

0%

thorough product listing/description

0%

product video

0%

clarity of small print

0%

sizing guide

0%

customer reviews

0%

buying guide

0%

360‑degree imagery

0%

zoomable photos of product

0%

exact product dimensions in primary image

Action No. 2

Set Return Expectations Up Front

Logistics, customer service and marketing teams can work together to help prevent returns. Create a clear return policy that is functional and well-defined.

More than 40% of top companies—which this study defines as a company with a self-assessed reverse logistics process that is much better or better than their competition—and 45% of manufacturing companies use a 100% satisfaction guaranteed policy. If a customer is not happy in any way with their product, they can return it.

Develop a policy that works for the company, which might be a mix-and-match of the top tactics highlighted in the accompanying chart. Internally, encourage teams to learn and understand the policy so that everyone on the company side is on the same page. Then make it easy for customers to find and read to temper potential dissatisfaction.

Six Return Policies Companies Use

100% satisfaction guaranteed0%*
Time limit-based return0%**
Complete refund0%
No standardized return policy0%
Store credit0%
Exchange only0%

* 42% of top companies and 45% of manufacturing companies use this policy.

** 41% of retail companies use this policy.

Shipments

After a customer has visited the website and placed an order, it’s on the company to make a potential return as seamless as possible.

Action No. 3

Simplify the Process

Facilitate a hassle-free experience for customers. First, quality check items to make sure that the correct item is being sent and that it is adequately packed and protected.

Then, if a customer chooses to return an item, don’t make them jump through hoops. Follow the lead of 75% of companies in our study and make return labels easy for customers to access.

Include return shipping and provide a label that can be applied to either the original packaging or additional packaging provided.

Top Processes for Online Returns

Return labels can be printed online
0%
Return labels are included in the packaging
0%*

*53% of large companies and 47% of top companies do this.

Warehouses

When returned goods reach the warehouse, make sure teams and facilities are prepared to handle them effectively.

Action No. 4

Use Technology to Be More Efficient

Tools and technology can dramatically reduce the time and effort involved in managing returns, while cutting down on errors and making a logistics facility more productive.

A majority (76%) of top companies, and 67% of all companies, are already using different technologies to improve their reverse logistics process.

These span the breadth of hardware and software, and include automatic data capture for returned goods using barcode and scanning tools as well as digital item categorization, RFID, cloud computing and more.

Technology companies, unsurprisingly, serve as a beacon for which logistics-focused hardware and software other companies should focus on. Weigh their choices, as well as those of top companies, alongside a technology’s potential growth to decide which options are a good fit for implementation.

Technology Improves the Process,
Now and in the Future

Current
Use
Projected
Growth
Automatic Data Capture0%+0%
Cloud Computing0%*+0%
Predictive Analytics0%+0%
Blockchain0%**+0%

*59% of top companies and 80% of technology companies use cloud computing.

**30% of top companies and 36% of technology companies use blockchain.

Action No. 5

Optimize Warehouse Layouts

While hardware and software can make a huge impact on the functionality of a facility, so too can the setup of the space.

Many companies—41% our study found—combine e-commerce fulfillment and retail returns into one facility to improve efficiency. This is especially prevalent among technology and retail companies.

House Fulfillment and Returns in One Facility for Efficiency

Like these types of companies:

0%

Technology Companies

0%

Retail Companies

0%

Top Companies

Within these facilities—or any center for receiving returns—the flow of goods from place to place is important. Many companies create a staging area for arriving returns and another for longer-term rack storage, then develop a floorplan to move goods between them.

Set up an intuitive plan for the fulfillment center that will eliminate mistakes, conserve valuable space and improve overall efficiencies across the floor.

Optimize the Floor for Returns

Explore four warehouse tactics used by different types of companies.

Develop a staging area to triage arriving returns

0%
all
companies
0%
large companies
0%
manufacturing companies
0%
top companies

If you can’t
beat 'em, join 'em

Customer returns are an inevitable piece of the current e-commerce climate.

Fighting the process could lose you customers and damage your business’s reputation. Embrace returns instead and optimize your communications, shipments and logistics facilities to lessen their impact.

With a smart and streamlined process set in place for reverse logistics, your business can grow, evolve and compete successfully today and in the future.

Discover More Shipping Topics

Methodology

The United States Postal Service® commissioned Provoke Insights, an independent market research firm, to conduct an online survey among 300 professionals across the U.S.

The 10-minute survey was facilitated online from July 23, 2019, to August 5, 2019.

Respondents

Ages

21 to 80

Employment Status

Full-time, part-time or business owner

Company Types

Sells tangible products via own e-commerce site or third-party e-commerce site

Areas of Work

Executive leadership, logistics, operations, supply chain management

Subgroups

The research was evaluated using subgroups, including:

Type

Top Company: Those with a (self-assessed) reverse logistics process much better or better than that of the competition [217/300]

Not Top Company: Those with a (self-assessed) reverse logistics process the same as, slightly worse than or much worse than the competition [83/300]

Industry

Retail [105/300]

Manufacturing [74/300]

Technology [35/300]

Size

Large: 1,001+ employees

Small/Medium: 1,000 employees or less

Statistical differences between these subgroups were tested at a 95% confidence level.

Detailed Breakdown

Age

  • 14%21 to 30
    years old
  • 35%31 to 40
    years old
  • 21%*41 to 50
    years old
  • 18%**51 to 60
    years old
  • 12%***61 to 70
    years old
  • 1%*71 to 80
    years old
  • 30% of manufacturing
  • 27% of bottom companies
  • 15% of small/medium-sized companies

Company Size

  • 34%*< 100 employees
  • 21%**100 to 500 employees
  • 16%***501 to 1,000 employees
  • 12%1,001 to 5,000 employees
  • 8%5,001 to 10,000 employees
  • 9%> 10,000 employees
  • 44% of retail companies, 31% of technology companies, 48% of bottom companies
  • 27% of manufacturing
  • 30% of manufacturing

Employment Status

  • 77%*Full-time
  • 20%**Business owner
  • 2%***Part-time
  • 93% of manufacturing, 97% of large companies, 84% of top companies
  • 34% of bottom companies, 27% of small/medium-sized companies, 27% of retail companies, 20% of technology companies
  • 6% of bottom companies

Industry

  • 33%Retail
  • 25%Manufacturing
  • 42%Other

Sales Methods

Company’s own e-commerce site
85%*
Company’s offline retail store
57%**
Third-party e-commerce site
56%***
Third-party distributor
34%****
  • 95% of large companies, 92% of manufacturing, 89% of top companies
  • 68% of retail companies, 61% of small/medium-sized companies, 61% of top companies
  • 72% of large companies
  • 61% of manufacturing, 43% of large companies