How reverse logistics is upping the returns game in retail

By Lars Veul, Pargo Co-Founder. In recent years, we have seen more online buying behaviour being influenced by the type of returns method offered by brands online. A survey we undertook last year shows that 70% of consumers say having the option to return orders is an important factor when buying from an ecommerce store.

While returns from home is a popular and convenient method for shoppers throughout South Africa, it also comes with many frustrations. One of the most important challenges facing our logistics industry is inaccurate or access-restricted addresses, including security estates and business parks, rural and township areas, larger high-rise buildings and outlying areas. However, by enabling consumers to buy online and then collect an item from a pickup point of their choosing, this problem can be overcome.

The rising trend of Buy Online, Pick Up in Store (BOPIS) is fast becoming a South African favourite, unlocking the world of ecommerce for every citizen. Previously, many would not have had easy access to many of the brands who sell online because of difficulties in reaching or even articulating addresses.

More than half the respondents in our survey indicated that they shopped online monthly or occasionally. These shoppers also use the BOPIS model for its convenience, reliability and affordability. What is important to note is that the system works the other way as well, something we call reverse logistics. Because you already have a smart technology-enabled network of access points, you can now return online purchases back to the warehouse they were initially dispatched from.

Reverse logistics

With reverse logistics in place, retailers are allowing consumers to buy in-store and return from any participating pickup point that suits them best. There is no hassle or need to print a waybill. Consumers can simply log their return online and drop it off at their preferred pickup nearby. The upside for retailers is that returned products can be placed back in the supply chain quickly and effectively, which brings down storage and distribution costs.

It carries other advantages, too. For example, returns tracking is automated and cloud-based technology will mean that it can be accessed and shared easily. Another benefit is that it offers data insights that can help understand why a particular item is being returned. By analysing the consumer’s behaviour, a business will know not to order that item again, thereby saving money down the line and improving its inventory management process.

The solution is being extended even further, in that it has unlocked medical industries with donor-demand, including the South African Bone Marrow Registry (SABMR). This means South Africans can receive their test swabs at home and return them to SABMR when and where it suits them best. This process cuts the donor-testing journey timeline by at least 40%-50% simply by removing the barrier of logistics and putting the control back in the hands of the consumer.

Cost effective

We firmly believe that by using return methods that allow you to drop your parcel while still going about your day without disruption, missed deliveries and reattempts, is the best option for online shoppers. What’s more, the model is cost-effective. Particularly in South Africa’s current economic climate, price of delivery and product continues to be a top influencing factor when it comes to buying online. This pushes brands to innovate and cut unnecessary costs to prevent transferring these expenses onto the end consumer in the form of margins and markups. BOPIS works because parcels are sent to pickup points, rather than multiple different addresses.

Delivery is not a product in your inventory, it is a support function to complete your consumer goals of buying from your store, so you should steer clear of adding markups to delivery methods to keep consumers happy and coming back.

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