Reverse Logistics Is Finally Getting Its Digital Transformation

Digital technology is transforming industry all over the world. From restaurants to retail, innovative devices and software are helping businesses run more efficiently and serve their customers better than ever before.

With all the different forms that digital technology can take, brands can nearly always find a solution to improve the way they run their business. From artificial intelligence and data to augmented reality, virtual reality, and automation, a lack of choice is not an issue when it comes to digital transformation.

However, one industry which has been relatively slow to get on board the digital transformation gravy train is reverse logistics. That's starting to change now, and companies are looking for ways to use innovative technology to facilitate consumer returns.

Reverse Logistics

Why, then, has reverse logistics been so slow to come to the digital transformation table? For starters, reverse logistics is generally an offline process - receiving returned goods, assessing and processing them, then disposing or preparing them for resale. However, one must only look to other traditionally offline industries - such as taxis or restaurants - to see how digital technology can disrupt these spaces.

Also, the process of bringing offline brands online is an easier sell for some industries than others. Digital transformation brings with it a need for an often-significant monetary investment and needs to be sold to decision makers. The issue with this is that, in order to sell digital transformation, the ones doing the selling need to demonstrate how its implementation will bring value to the business.

This is easy with front room retail - digital technology delivers great customer experiences which consumers can enjoy first-hand. Technology can bring more people to your store to spend their hard-earned cash.

However, with back-room processes, such as reverse logistics, value is much harder to demonstrate. Consumer returns already cost brands a significant amount of money. In the US, return deliveries alone are estimated to hit $550 billion by next year - and that's before you consider other costly factors such as restocking expenses and waste losses.

However, the manual processes traditionally deployed in reverse logistics are inefficient and unsustainable and can be significantly boosted by digital technology. While some returns can be resold, a massive proportion cannot, and so must be stored or disposed of - taking up valuable warehouse space and costing money. The long, inefficient path alone is cumbersome: Items go from consumer to retailer, to vendor, to liquidator, to jobber, to reseller, to a secondary end user.

Not only is this a logistical nightmare, but it leaves a large carbon footprint, with the transportation involved potentially spanning hundreds of miles.

Digital Transformation

Advanced data platforms are a great fit for the reverse logistics industry and can revolutionize the processing of returned items.

Software as a Service (SaaS) platforms can use sophisticated data analysis to automatically decide the best channel for returned items. Decisions such as whether to refurbish, reroute, liquidate, or scrap returned products can be assigned by the software based on historical data and other information updated in real-time. Retailers can save time and money by quickly processing and tracking returns - making reverse logistics more efficient and reducing the number of items which end up in the trash.

From a customer service perspective, smartphone apps are helping retail brands make the process of returning unwanted items a far more streamlined and convenient process. Apps can help a customer process a return and even grant them an instant refund - once the return has been authorized. Other apps enable customers to compare shipping costs, helping them save money on the associated price of returning products.

Online auction platforms can also help make the process of selling on returned items cheaper and simpler. Instead of arranging for the items to be shipped off to liquidation centers, they can be sold to a global network of buyers. These buyers are interested in products in all manner of conditions - helping earn extra revenue, further reducing the number of items ending up in a landfill, and lowering the associated carbon footprint of the company.

Finally, blockchain - the technology which underpins cryptocurrencies - can also be used to make reverse logistics more transparent and secure.

"Transport and logistics executives can also use blockchain to reduce the cumbersome methods of traceability in their supply chains," reports Consultancy.uk. "To make this happen, transport and logistics companies must start to establish trust as the foundation of a collaborative blockchain ecosystem. They could use blockchain to improve on complex processes of reverse logistics, since a blockchain provides an evidentiary trail of information which can rapidly be used to work back to the point of origin."

Blockchain has yet to prove itself outside of cryptocurrencies, but the promise offered by the technology - especially in logistics - is great.

Final Thoughts

Digital transformation is finally starting to find its way into the reverse logistics industry. Whether it's through blockchain, data-driven artificial intelligence, digital reselling platforms, or smartphone apps, digital technology has the power to drive better and more efficient consumer returns.


Digital transformation is set to be a hot topic at Consumer Returns Management 2019, taking place this October at the Hyatt Regency Austin, Texas.

Download the agenda today for more information and insights.



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