Why mastering returns is key to 3PL growth

Returns are one of the biggest problems plaguing e-commerce retailers, and thus one of the biggest opportunities for third-party logistics companies to attract and retain retailers is to provide them with reverse logistics solutions. 

However, while 3PLs typically excel at fulfilment, returns processing usually lags behind in sophistication and value maximisation. Unlike the well-supported fulfilment journey that’s catered to with warehouse management (WMS) and order management (OMS), returns frequently still rely on manual processes, leading to delays and wasted resources.

By implementing returns management systems, 3PLs can completely transform how they handle returns, turning e-commerce returns from a burden that sits untouched in a cage to a competitive advantage that drives growth.

Returns orchestration will give 3PLs the tools to optimise the entire returns process, allowing them to:

The increased efficiency not only equates to cost savings for 3PLs but also improves the consumer experience of returns, a key differentiator in a fiercely competitive retail landscape. That’s a win-win for 3PLS: cost reduction through better workflows and increased revenue by attracting and retaining more retail customers.

Digital returns portals are powerful tools for 3PLs to transform the returns process and enhance their value proposition by streamlining the initiation and tracking of returns for both the retailer and the customer.

From the moment a consumer registers a return, the portal will gather data and insights about each return, including what items are being sent back, by who, and why. The data gathered won’t just inform 3PLs about what returns are coming back, but also allow them to optimise returns processing.

For example, some returns can be automatically rerouted to alternative locations if they hit specific criteria, such as sending damaged items or returns with particular SKU codes straight to repair or disposal facilities. This not only saves 3PLs the act of processing and rerouting these returns themselves but also removes extra transportation costs.

Many retailers are accelerating the digitisation around returns, which puts the pressure on logistics service providers to be ready to access retailers’ returns data and use it to ensure maximum efficiency in their own operation – including ingesting data to other systems like WMS and OMS, enabling intelligent returns processing and a more efficient reverse supply chain.

Many 3PLs are still relying on manual returns processing that requires workers to scan each parcel and input individual data for each item. This is not only time-consuming and prone to errors, but it also creates a bottleneck in the process.

With returns orchestration technology, the data captured at returns initiation is integrated into warehouse management systems, so all information, such as product details and return codes, are already available for each item before it even arrives in the warehouse. Automated workflows then take over, displaying clear instructions for each item, eliminating the need for manual sorting and significantly speeding up the entire processing cycle.

In addition, parcels can be sorted into designated areas in the warehouse on arrival based on the data collected. For example, items with a high chance of being resold (for example, based on SKU and return reason), can be placed into a priority zone. These items are then processed first, ensuring they are quickly returned to inventory and available for purchase. This reduces processing time for the most important items, and prevents a backlog of potentially valuable stock from accumulating in sorting cages.

Prioritising high-resale items creates a win-win situation for the retailer and the 3PL. Retailers recapture lost revenue by getting sellable items back into stock faster. For the 3PL, faster processing of valuable inventory translates to increased revenue and a stronger value proposition for their retail clients.

Returns orchestration provides 3PLs with a more efficient and cost-effective returns management process. Data captured at the point of return registration provides the foundation for intelligent sorting within the warehouse, reducing the operational effort required for returns management. With automated workflows and intelligent sorting, 3PLs can process returns faster and with fewer errors. This frees up valuable resources and cuts costs, allowing them to handle a larger volume of returns and take on more clients.

As a result, returns orchestration doesn’t just improve the processing of existing returns, it becomes a tool for 3PLs to scale their operations and expand their market reach, which will become ever more important as retailers struggle with rising return rates and costs.  

Ready to unlock the power of efficient returns and elevate your value proposition for retailers? Talk to our team about how our returns orchestration technology can transform returns from a burden into a strategic advantage.