As online retail continues to grow. So does the need for better reverse logistics to handle the influx of customer return. A recent report from Cerasis, a leading transportation management company, found the costs of reverse logistics exceed $750 billion per year, with up to 30 percent of all products ordered online being returned.
While the return process varies widely across different retailers and industries, the overall product returns are simply too burdensome to consumers who are paying shipping costs and to retailers who are picking up all other charges, only to then try and charge the supplier.
Cerasis’ report takes a look at how applying blockchain technology to reverse logistics may be able to reduce some of these costs and enhance customer experience. According to the report, reverse logistics can cut into retailers’ profits by as much as 20 percent. It also states retailers can reclaim up to 32 percent of the total product cost by having an effective reverse logistics function which allows for possible reselling the item, recycling it or remanufacturing it.
“The road to better reverse logistics is not always clear, and supply chain leaders need to understand a few best practices for implemented combined blockchain and reverse logistics strategies,” the report said.
The report states integrating supply chain systems into a single platform can provide a combined approach to managing product lifecycles from procurement through reclamation, recycling and disposal. While the benefits of blockchain technology are still being explored within the supply chain, there are several direct applications Cerasis believes will be worthwhile.
Blockchain allows for better tracing and transparency of a product’s full lifecycle from the manufacturer’s sourcing of component materials to final disposal. When this traceable chain of custody is certain, it can make for faster product recalls, which is one application Walmart has tested for the past couple of years. As explained in a Technavio Report, blockchain technology can enhance the flow from information in reverse logistics, helping manufacturers understand the full cycle of their products, even after disposal.
Reverse logistics with blockchain applications can also ensure products such as smartphones and other electronics are disposed of without compromising risks to the former users who may still have personal information on those devices. Recycling and refurbishing electronic products are a growing segment of retail and when blockchain transparency is used to track products through their life cycles the stored personal information can not only be safeguarded but removed without compromise as well.
Retailers using blockchain applications to track returns and initial orders will likely increase consumer trust, even when the customers are business-to-business purchasers, the report stated. Blockchain also helps eliminate fraud and counterfeit products which are more likely to occur with online purchases.
The report also suggests retailers use blockchain technology in managing returns to make those efforts visible to consumers. Since 67% of shoppers check return policies before making a purchase, this will aid in selling more product and creating hassle-free returns policies.
Blockchain can enhance returns management by providing a means of tracking returns and also identifying issues contributing to the higher-than usual returns rates.