Run That Back – What is Reverse Logistics?

The 9 Types of Reverse Logistics and Their Benefits 

Reverse logistics is as essential to businesses as water is to fish! Just like how a fish depends on an ocean to survive, businesses depend on reverse logistics to manage their flow of returns and materials, preserving value while upholding environmental responsibility. But reverse logistics isn’t a one-size-fits-all concept - it encompasses a variety of processes, each serving a unique purpose and offering distinct benefits.

Let’s take a look at the nine main types of reverse logistics and highlight the advantages they bring to businesses, customers, and the environment.

1. Returns Management

The most common type of reverse logistics focuses on handling standard customer returns caused by defects, incorrect orders, and dissatisfaction. By instilling an optimized return flow and a well-structured reverse logistics process, retailers can recover up to 50% of the profit they lose due to returns. Each retailer has their own type they utilize, such as return policies, try-before-you-buy, free returns, etc. However, these approaches lose their impact if they aren’t seamless and simple for customers, 92% of whom are more likely to repurchase from retailers with a hassle-free returns process.

2. Return Policy And Procedure (RPP)

A return policy and procedure are a set of rules created by retailers to guide employees and customers in returning, refunding, or exchanging items they no longer want. Before making an online purchase, 96% of consumers review a retailer’s return policy. Return policies should be transparent, leaving no room for confusion; as a result, if implemented correctly, these policies boost customer confidence and loyalty, driving a positive experience!

3. Remanufacturing Or Refurbishment

This form of reverse logistics involves goods being remanufactured, refurbished, or reconditioned. By doing so, businesses can recover a product’s value while using 50–80% less energy compared to manufacturing a new one, ultimately reducing environmental impact. 

4. Packaging Management

Instead of constantly purchasing new packaging and repetitively discarding old ones, retailers have the option to reuse packaging material. For example, Coca-Cola introduced reusable glass bottles in 2018, encouraging consumers to return empty bottles to retailers for reuse within the brand’s system. This approach effectively minimizes waste and ensures product disposal is done correctly. 

5. Unsold Goods

This process focuses on sending back unsold goods from customers, retailers, or warehouses to the manufacturers. Returns like these result from low sales, outdated inventory, or a rejected delivery. Through this, unsold goods are efficiently repurposed in a cost-effective manner, reducing expenses for businesses.

6. Delivery Failure

Products, for whatever reason, may not be delivered to their intended destination. In such cases, products are returned to the manufacturers or shipped back to consumers, the latter boosting customer loyalty. 

7. End-of-life

The term End-of-life (EOL) refers to when a product is no longer supported, manufactured, or sold by a company. Businesses can communicate with their customers about their product’s obsolete state instead of complete, utter silence, reducing the chance of a negative reaction. With in-house collection programs, manufacturers can also directly manage the return of end-of-life products, ensuring effective retrieval and processing. 

8. Rental and Leasing

Products under lease or rental contracts must be returned to the owning company, who then re-markets or redeploys them, which is a great way to reduce ownership of rarely used products.

9. Repairs and maintenance

This process involves customers sending back products (for example, a laptop or a phone) for warranty or repair needs if problems arise. Businesses sometimes offer previously damaged products to new customers after they’re repaired. 

These different types of reverse logistics provide businesses with a range of options to handle their product returns or refurbishments, enabling them to customize solutions to their unique needs and goals and offering a way to breathe life back into old products rather than dooming them to waste, which highlights how necessary a well-structured returns process is.

Moving Forward with Reverse Logistics

When it comes to reverse logistics, the only way is forward! By implementing a well-structured reverse logistics process, businesses can turn moments of disappointment into opportunities for innovation and environmental stewardship.

As customers demand greater accountability and convenience, reverse logistics will continue to play a pivotal role in shaping modern supply chains. By investing in these strategies, businesses can position themselves as leaders in sustainability, customer experience, and operational efficiency, proving that returns don’t have to be the end of the line; they can be the start of something better.

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Venus Kamara, Content Marketing Itern

Akeneo