Nishith Rastogi

Nishith Rastogi, Founder and CEO, Locus

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5 Strategies For Retail Businesses To Reduce Last-Mile Reverse Logistics Costs

The Pandemic bolstered the growth of e-commerce which also brought the challenges like last-mile delivery and reverse logistics. Here are the 5 strategies that could solve the challenges for startups and established conglomerate as well

Prolonged lockdowns and quarantines during the pandemic boosted e-commerce revenues to $5 trillion in 2022. Consumers resorted to online shopping, leading to a 12.2 per cent year-on-year increase in global sales.  These trends not only facilitated the growth of direct-to-consumer (D2C) brands but also revolutionized the last-mile logistics sector to provide an enhanced consumer experience. With minimal delivery charges, cash-on-delivery options, reliable delivery schedules, accurate delivery forecasts, and speedy redressal of grievances, customers also expect seamless reverse logistics to enjoy hassle-free returns.

Reverse logistics refers to the flow of products from end users to the warehouse or fulfilment hubs. Post-delivery, around 20-30 per cent of customers tend to return their merchandise due to multiple reasons. The rate of online returns varies for different product categories, ranging from 25.9% for electronics to 46.5% for fashion. While efficient return policies promote customer loyalty, they also incur over $761 billion in lost sales. Supply chain businesses, especially startups, find it challenging to bear investments in hiring workers, increasing warehouse space, establishing separate departments, and planning return routes. 

The following strategies may thus help retailers and other businesses which have a heavy reliance on supply chains to reduce last-mile reverse logistics costs and facilitate timely returns.

Adding return stops to deadhead miles

Post-delivering the listed orders, empty trucks cover more than 20.6 per cent of the miles to return to the fulfillment centers. Such no-revenue miles are called deadheads and are the primary forms of logistic waste. However, adding stops to pick up return requests can increase drop density, route efficiency, and profitability. Vehicle routes can be optimised to schedule and manage order reversals at specific locations. Drivers and dispatchers may carry the returned products to warehouses, eliminating additional logistics and worker costs.

Addressing the Capacitated Vehicle Routing Problem (CVRP)

The number of orders a truck can deliver in a single trip depends on the weight or volume of each item and its maximum carrying capacity. For daily bulk order returns, it is challenging for startups to optimise vehicle routes, schedule on-demand pickups, and make optimal use of the vehicle space.

In such cases, automated Dispatch Management Platforms may help logistics businesses fulfil end-to-end order management, slot management, parcel sorting, capacity management, and route planning. These cutting-edge logistics operations tools enable fleet tracking in real-time, gathering carrier insights, and saving time and effort spent organizing and managing vehicle spaces. Moreover, cross-fleet utilization may combine the fleet capacities for diverse deliverables, maximizing vehicle utilization, reducing multiple shifts, and cutting down on fuel costs.

Utilizing analytical software for data-driven decision-making

Reverse logistics in the final mile is a complex and expensive process, and organizations are now faced with increased dynamism in decision-making due to volatile markets. The need of the hour is optimal fleet planning and data-driven decision-making. Logistic startups need to procure insights on failed deliveries, most-returned product categories, on-time delivery rates, and cost-per-mile of sales returns. Advanced fleet tracking software may provide analytical insights to identify logistics loopholes and strategize reverse logistics plans. They facilitate accelerated, secure, and cost-effective deliveries and flexible and scalable workflows.

Increasing transparency with visibility tools

Failed and reattempted pickups add to the logistic costs and disrupt predetermined schedules. Real-time visibility tools and communication software can help dispatchers interact with customers, prioritize return options, and reduce last-mile reverse logistic costs. They maintain the privacy of communication and improve customer experience with end-to-end visibility, which is critical to identifying potential disruptions proactively. Automated tracking of packages accounts for more on-time pickups, better customer satisfaction, and secured unloading of merchandise to the warehouse.

Investing in cutting-edge technologies

Small-scale logistics players experience increased decision-making dynamism while operating in interconnected supply chains. They require an integrated platform to connect various stakeholders and manage all stages of fulfilment, from order capture to planning, scheduling, routing, visibility, and payment processing. Investing in technological excellence drives resilience, efficiency, and consistency. They help achieve coherence across all fulfilment stages, channels, and models. Such consolidated interfaces enable supply chain firms to batch and plan deliveries and reversals across different fulfilment models and channels in a single unified space, leaving little room for error. They also empower service providers to interact with consumers and incorporate last-minute changes to delivery schedules to deliver incredible experiences on the first attempt itself eventually.

The bottom line

The colossal increase in e-commerce sales has catalyzed a “tsunami of returns.” With evolving consumer expectations, over 67 per cent of shoppers consider hassle-free return policies before making a purchase. Under such circumstances, logistic startups need to optimize their return routes, enhance vehicle space utilization, make data-driven delivery decisions, increase real-time visibility of packages and offer a delightful customer experience. Real-world ready Dispatch Management solutions provide insights from advanced analytics, vehicle route planning, fleet tracking, power on-time and memorable fulfilment experiences at scale, and sustainable last-mile fulfilment to streamline the various stages of order fulfilment.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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