{"id":11575,"date":"2018-02-28T11:34:52","date_gmt":"2018-02-28T11:34:52","guid":{"rendered":"http:\/\/www.whichwarehouse.com\/blog\/?p=11575"},"modified":"2018-02-28T11:34:52","modified_gmt":"2018-02-28T11:34:52","slug":"reverse-logistics-sme","status":"publish","type":"post","link":"https:\/\/www.whichwarehouse.com\/blog\/news\/reverse-logistics-sme\/","title":{"rendered":"How reverse logistics can help your SME"},"content":{"rendered":"

Reverse logistics might not be a phrase that trips off the tongues of the management team of the average British, small and medium enterprises (SME) retailer, but it\u2019s a growing area of concern, especially with the influence of Black Friday and other American shopping trends that increasingly impact the UK marketplace.<\/strong><\/span><\/p>\n

What is reverse logistics?<\/strong><\/span><\/h2>\n

Most of us are familiar with traditional logistics ie the process of planning and controlling a cost-effective movement of raw materials, manufacturing processes, finished goods and information to the consumer. Reverse logistics is defined as the process of planning, controlling and managing the cost-effective flow of collecting, storing and recycling or redistributing a returned item.<\/span><\/p>\n

While most organisations have a well-developed process for forward logistics, the reverse process, because it is customer led, tends to general much less information, to be planned for with much less accuracy and to be viewed entirely as an unavoidable cost to the business rather than as an area of business activity in its own right.<\/span><\/p>\n

How returns have changed the logistics industry<\/strong><\/span><\/h2>\n

Traditionally, customers returned between 8-9% of the goods purchased in a year, with peak return periods happening at Christmas and again after the New Year sales. Today, returns are reckoned to run nearer 12% and while there\u2019s a peak after Christmas, the New Year sales syndrome has been massively suppressed with a tendency for returns to cycle throughout the year. The Amazon effect has influenced the returns process too, although much more in the USA than the UK (as yet) with \u2018open box deals\u2019 becoming mainstream.<\/span><\/p>\n

This puts greater strain on SMEs in particular because they can no longer:<\/span><\/p>\n

    \n
  1. Plan to take on extra staff for key returns periods<\/span><\/li>\n
  2. Budget for extra logistics costs for the periods of major returns activity<\/span><\/li>\n
  3. Avoid the buy anywhere, return anywhere demands made by omni-channel marketing.<\/span><\/li>\n<\/ol>\n

    Omni-channel and SMEs<\/strong><\/span><\/h2>\n

    Multi-channel marketing has amazing advantages for the SME sector which can often be more nimble than large businesses in recognising and meeting customer needs. However, it also has a big effect on the returns part of retailing. One British clothing retailer claims to have a 30% return rate across all markets, with the rate of online returns running at twice that of bricks and mortar retailing.<\/span><\/p>\n

    Flexible returning means that customers expect to be able to choose when and how to return items through all or any of the following systems: postal, courier, click and collect outlets, traditional stores.<\/span><\/p>\n

    SMEs can struggle to create equivalent processes for each of these return systems, causing substantial differences in the customer experience.<\/span><\/p>\n

    Other business consequences of increasing returns<\/strong><\/span><\/h2>\n

    Compliance – returned goods fall under a range of legal constraints which add to the cost of doing business. Returned food-stuffs and medicines can be a substantial cost centre, as can other goods like lingerie, cosmetics and other forms of consumable.<\/span><\/p>\n

    Developing a reverse logistics strategy for profit and success<\/strong><\/span><\/h2>\n

    Clearly defined strategies for the returns process can not only reduce costs by improving efficiency but also help manage risk and restore or increase the value of return items.<\/span><\/p>\n