Reverse pickup is nothing but a normal pickup but from your customers end. In a reverse pickup your customer will send you the consignment from his end. Logistics company (Fedex, GATI ,etc.) will transfer the product from your customer to you.
Product returns by the customer
Some goods are inevitably returned to the seller. It is true in case of physical as well as an e-commerce store. Customers return the products because of,
- Incorrect product or product size ordered
- When customer no longer needs the product
- The product fails to match customer expectations
- When retailer ships wrong product or product size
- The product was damaged upon arrival
- When the customer engages in wardrobing
- Customer cancelled the order
- Mal-functioning product
Wardrobing: Wardrobing is when a customer buys a product, use it and attempt to return the product for a full refund. For example, a job hunter who buys suits for an interview returns the suit after the interview to save the money. This tactic is not limited to clothing and accessories.
Product returns by carrier
There is a number of reasons where the product is not reaching the customer at all, and it is being returned back to the seller. Here is the complete list of reasons why the carrier is returning the product to the seller.
- The customer gave the wrong or incomplete address
- Customer opened the package and refused to accept it
- The customer is not available to collect the order
- There is an amount dispute between the delivery person and customer (generally happens in case of COD orders)
- Mis-delivered products
- The delivery person gave the fake comment (Fake delivery attempt)
- Product repairs
Cost of reverse logistics in e-commerce
The cost of reverse flow is usually high whereas generally, the cost of returned goods is typically low. The returns are extraordinarily expensive and eat up the already pressured profit margins.
Product returns add an estimated 8 to 10% of the cost price of the product. In the apparel industry, for example, return rates are typically higher by 40% than others as we offer multiple sizes & multiple colors.
Retailers are going to see the cost of reverse logistics go up dramatically over the next decade.
The cost of Reverse Logistics is almost 1.5 times of forward. There are some factors which determine the shipping cost which are,
- From and to Country/region/state/city
- Product weight
- Package size
- The price of the product
- Base delivery rate
- Fuel surcharge
- CGST & SGST
- Customer group
The true cost of product returns are not only the logistics costs but also the damage to the customer experience due to the inconvenience caused to the customer.
Each time the customer returns the product, chances are high that they will not buy again from store. When a customer churns, the lifetime value of that customer is lost. also, the cost of acquiring the customer is lost. Besides, it makes competitor stronger by giving customer an inferior product and service.
Return Policy
Sellers claim that many buyers place fake orders, returns the product in a damaged condition, replaces the original product with the fake one. Sellers come across many such buyers on a regular basis.
Amazon is doing a decent job while defining the return shipping charges as shown in the image below. It has clearly explained that if the seller is at fault, he/she will have to bear the reverse shipping cost and vice versa.
