Reverse logistics is defined as “the movement and management of products and resources after sale and delivery to the customer, including product returns for repair and/or credit,” according to the Council of Supply Chain Management Professionals.
Historically, retail returns comprise 8% of total sales. However, e-commerce return rates are much higher at 15% to 30%, depending on the product type.
According to eMarketer, online sales are projected to rise 17% in the 2016 holiday season to $95 billion, which could result in up to $29 billion worth of returns.
Returns add significant costs to retailers and distribution networks that are not optimally equipped for the reverse flow of inventory. It is estimated that returns, either sold at discount or disposed of, cost retailers 4.4% of total revenue each year.
The solution to the reverse logistics problem can be found in improved and expanded supply chain networks, creating tremendous industrial real estate opportunities as users look to add additional warehouses and distribution centers to support the reverse flow of inventory.
Third-party logistics (3PL) operators and owners of 3PL facilities are poised to benefit, as many retailers seek to outsource their reverse logistics operations to cut costs and gain maximum efficiencies.