The rise of global e-commerce product fulfillment has led to an increase in returns processing and costs due to customer actions. Customers can now browse for products they want online, order them to arrive at their doorstep, and test them out. But without seeing the item in their hands as they would at a retail store, they face the risk of ordering items that aren’t exactly what they’re looking for. Also, if you are managing your shipping on your own, there may be a higher risk of damaged items. The rise of e-commerce is one of the biggest operational challenges for reverse logistics services companies, and as more retailers offer free shipping, more consumers will be taking advantage of product returns. The power has shifted towards customers and away from retailers. Despite these changing trends in the reverse supply chain, you don’t have to fall by the wayside. Here is what you need to know about the changes in logistics due to e-commerce, and how you can save money and perform more efficiently.
How e-Commerce Influences Logistics and Retail
Years ago, independent retailers had a harder time competing with automated warehouses and cargo barges like Walmart’s. These large companies had better ability to draw in mass numbers of customers and meet all their needs in one location. However, the rise of e-commerce has almost flipped this scenario. Companies that operate through e-commerce are now rising in popularity, and physical retailers are having a harder time competing. Physical retailers that have not adopted e-commerce practices are threatened by the success of online counterparts. Based on this dramatic shift, it is safe to assume that brick-and-mortar retailers should adopt e-commerce as well. Working with a third-party logistics (3PL) and supply chain service can help you manage your shipping and retail e-commerce shift so you can focus on your marketing (web content and advertisements).
Return Process: Managing, Outsourcing, and Shipping
Managing returns and orders in the same space is challenging and it is not viable for many businesses because of the differing margins. The cost to process returns is usually high, while the residual value of goods is usually low. These problems can be reduced by working with a 3PL provider that is able to handle returns and provide flexibility within the supply chain. They can also mitigate costs and capitalize on external efficiencies. Outsourcing returns processes does not eliminate the need for inventory space, but it shifts them to a company that has enough space and warehouse management to handle it. Since 3PL companies also handle transportation and distribution, you can process products much more efficiently and cost effectively.
Reverse Logistics: How Retailers Can Save Money
Processing a return and repurposing, reconditioning, or recycling the goods can be costly in terms of time and finances for the merchant. Reverse logistics can actually cut into your profits by up to 20% per year. The rise of e-commerce makes this even worse as customers can order an item online—a shirt for example—find out it does not fit, and send it back without having to go to a retail store. The convenience of e-commerce puts all the control in the hands of the consumers and removes it from the retailer. So how can retailers save money? The answer is simple: outsource the process to a 3PL company. Retailers can claim a significant percentage of the total product cost by effectively setting up a reverse logistics function with a 3PL provider. They can resell the product, recycle it, remanufacture it, and more, so you don’t have to.
e-Commerce: Impact of New Mobile Trends on Logistics
These aforementioned effects are changing standard processes and companies should start adapting sooner rather than later. Distributors that take the time to understand these changes can prepare to become one of the leading logistics and supply chains partners of the future. The following items are new trends affecting the logistics system due to mobile commerce.
- Systems must be frequently updated to prevent future problems within the chain
- Web design must be responsive and optimized for customers to easily view pages on smartphones, tablets, and other mobile devices
- Vendors and companies want access to Internet-based wholesale environments to simplify the ordering process
- Companies should all have mobile apps, which quickly load on smartphones and provide information at the tap of a finger
- Integration must be seamless so shoppers can have instant order capabilities and real-time inventory updates
- Advertising will be more automated thanks to Google AdWords, Facebook Ads, and other online ad agencies (pay-per-click (PPC) marketing campaigns)
- Inventory management will be more data-based
Outsource Your e-Commerce Fulfillment with Lean Supply Solutions
Working with e-commerce fulfillment services in Toronto can help you manage the shift to online retailing so you can focus on making your business and brand more accessible to shoppers. Some warehousing and distribution order fulfillment services in the USA are quickly learning and adapting their processes to implement functions that support the growth of e-commerce, and they can help you, too. If you’re looking for the right company to partner with, Lean Supply Solutions is the answer. We rise to the challenge of meeting our clients’ needs through our services, which include product fulfillment, warehousing and distribution, e-commerce fulfillment, warehousing pick and pack, and order fulfillment. Lean Supply Solutions is able to offer consistent, accurate, and quality results. To learn more about outsourcing to our 3PL distribution team, or to ask any questions, contact us at 905-482-2590.