Reverse Logistics Takes Toll on Retailers, Manufacturers: Study

Liquidity Services partnered with Elastic Solutions to understand how retailers globally handled returns management and reverse logistics.

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Liquidity Services partnered with Elastic Solutions to understand how retailers globally handled returns management and reverse logistics.

Key takeaways:

  • Over seven in 10 respondents said that the supply chain department was responsible for their returns management—more than twice as much as any other department. Other departments also well represented included operations (36%) and planning (35%).
  • About 61% of those surveyed mentioned that various departments in their organization shared the responsibility for managing returns. On average, two departments were involved in returns management, but some companies had as many as five departments taking care of returns.
  • Over 60% of respondents are returning product to vendor to recover costs, 45% are refurbishing at least some portion of their returns, and 30% are liquidating in the secondary market. More than one-quarter returned to stock.
  • Nearly half (47%) of respondents had plans to improve their recovery process within the next 6-12 months. Only 32% said their organization didn’t have plans to improve. Thirty-four percent of respondents had previously said they were not getting their desired recovery, and had multiple plans to change that narrative and improve the recovery process moving forward. About two-thirds will use multiple selling channels for liquidation, and another 52% believe that improving sorting and disposition process will lead to improved recovery. Only 21% said they were working with an outside liquidation organization to increase recovery.
  • Reporting and data visibility was the area retailers felt was most lacking, with only 22% of respondents rating it as “efficient” (21%) or “very efficient” (1%).
  • Most respondents (61%) had 2-4 legs of transportation in their reverse logistics operations, and 1% had five or more. The two primary ways retailers planned to reduce their legs of transportation were by leasing or buying additional distribution centers or rental centers closer to their stores (43%), and by handling returns dispositioning further upstream (35%). Over a quarter (29%) had no plans to reduce legs of transportation.
  • About two-thirds (65%) of retailers had just 1-2 touches in their reverse logistics operation, and 2% had five or more.
  • The majority of retailers were looking to use green/clean energy (61%) and recycling (45%) to contribute to their sustainability efforts.

“To conclude, there are clear gaps in retailers’ reverse logistics and returns management procedures. With escalating customer demands and expectations, improving reverse logistics efficiency is essential for success in today’s competitive retail market. The data in this executive brief strongly indicates that retailers recognize this need,” according to Liquidity Services.