Returns are a cold hard reality of many industries.

The activities involving a product or service after the point of sale can make or break a company’s margins for success. It’s also a common example of a process known as reverse logistics. The more streamlined and efficient a company is with reverse logistics, the better its bottom line.

Once a business accepts that its product won’t satisfy everyone, it can perfect and leverage reverse logistics into a profit-fuelling entity.

What is "reverse logistics"?

Depending on the industry, logistics necessitate the flow of raw materials, in-process inventory, and finished goods from production all the way to the point of sale. Surprisingly, reverse logistics don’t simply flip the process on its head.

Products aren’t usually returned in the same state they were distributed and are often damaged and unsaleable. Plus, there’s the matter of managing returns in a manner that adheres to regulations, keeps customers satisfied, and maintains if not boosts profitability. These are irrelevant factors in logistics, yet completely integral to reverse logistics.

It should also be noted that reverse logistics can come into play before products have left a factory, travelling backwards along the supply chain. They don’t always hinge upon points of sale.

Success in reverse

Since grocery stores have very tiny profit margins on their products, they were innovators of reverse logistical strategies such as reclamation centres which transformed into centralized return centres. These methods have been duplicated by most firms due to their resounding success.

Sears and J.C. Penny offered money back-guarantees to their customers a century ago, assuring brand loyalty and increased profits. Instead of being hindered, these retailers utilized reverse logistics as part of successful marketing strategies.

Innovative lessons for businesses

Sadly, it’s all too common for businesses to delay decisions on returns or unsold items since the original sale has “failed”. These businesses are being short-sighted. The longer a product lingers in the system, the more the worth declines.

By embracing effective reverse logistics, businesses can eradicate lost profits and seize other opportunities.

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Wonder if reverse logistics would make sense for you and want to get some ideas? Take a look at our Quick Start Guide.