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Getting 3PL Returns Management Right

Originally published on January 24, 2023 by Erhan Musaoglu, Updated on January 27, 2023

When customers wish to return items they’ve just purchased, complex orders you worked tirelessly to fulfill inevitably end up back at your door to begin the process most warehouses dread most: returns. For major retailers and ecommerce merchants, returns management is particularly challenging to get right, making the use of third-party logistics (3PL) services invaluable for alleviating the stress of high-volume order returns.  

That said, it is not enough for 3PLs to simply receive returns, repeat putaway processes, and move on to new sales… competitive reverse logistics is a significant undertaking and requires things like testing/quality control inspections, credit/refund transactions, dependable communication, the ability to repackage items before accurately rejoining your inventory, and more. 

In this blog, we will talk about the importance of having a good 3PL returns strategy, the fundamentals of overseeing high-efficiency returns, and some additional strategies for taking a holistic, 3PL-focused approach.

  1. Returns Management’s Effect on 3PL Clients and Consumers
  2. Strategies for Improving 3PL Order Return Operations
  3. Choosing a 3PL WMS for Returns Management

Returns Management’s Effect on 3PL Clients and Consumers 

With 30% of all merchandise ordered online being returned, it is mission-critical that you prioritize having a streamlined returns management process in place as part of your 3PL operations.

Even if you oversee a robust fulfillment network with modern digital warehouse management software, 3PL returns management can quickly become an expensive logistics nightmare and a liability to your brand’s reputation – particularly if you are handling fulfillment for multiple clients or hybrid operations

According to Supply Chain Quarterly, 3PL customer satisfaction levels dropped by 7% last year, and higher customer expectations and struggles with reverse logistics were partially to blame. 

As a 3PL, you are the bridge between clients and market consumers, making it your responsibility to keep both clients and the consumers confident in your returns management capabilities. On the customers’ side, returns and refunds must be streamlined and easy to accomplish. For clients, costs of returns must not exceed the cost of the resale process. Without satisfaction from both sides, your operation is more likely to lose customer loyalty and valuable client relationships.

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Strategies for Improving 3PL Order Return Operations

In light of the influence returns management has on 3PL fulfillment success, your business  will likely need to leverage multiple technologies and strategies to master ecommerce returns

Consider the following strategies for improving your 3PL returns management: 

    • Upgrade fulfillment technology to support returns and reverse logistics. Thanks to advancements in warehousing and inventory management technology –  tracking returns, monitoring reverse logistics, and maintaining accurate inventory levels/ecommerce supply chains is easier than ever. With the visibility and control offered by Cloud-based return management tools, guess-work can be eliminated for your fulfillment network and better flexibility and cost-savings achieved  around returns. 
    • Build dedicated return centers. Many of today’s top 3PL competitors are not only managing returns alongside everyday fulfillment processes like picking and packing, but are creating dedicated return centers to strengthen their warehousing network. Adding return centers that focus solely on carrying out return processes (i.e. quality control assessments, refurbishment, repackaging, putaway, etc.) prevent inconsistencies and disruptions to your other facilities and help to maximize your resale profits. 
    • Adopt scanning technology to expedite returns. Just like with smart inventory management features like directed putaway, functionalities like mobile scanning and artificial intelligence (AI) can be used to streamline returns, restocking and other related processes. From scanning inbound items and updating inventory levels to finding the best place to relocate returns in your fulfillment network – scanning technology promotes fast, convenient 3PL returns management. 
    • Ensure you are working with the right integration partners. Integrations are key to 3PL returns management, so making sure your ecommerce, shipping and carrier, and accounting/enterprise resource planning (ERP) connections are truly supporting you at each step of the way. That way, no matter what happens, you know you will be able to effectively communicate information to your clients and customers about returns, refunds/costs, and other critical data.
    • Use reporting and analytics to monitor the health of reverse logistics. Reporting and analytics allow you to do things like keep your 3PL clients informed, improve the returns process for shoppers, confirm items are resellable/profitable for better business planning, and save money on the overall returns process. While you are busy overseeing hundreds of complex orders for multiple clients, reporting and analytics solutions will work to help you identify causes for returns and lower their overall number. 

Choosing a 3PL WMS for Returns Management

No matter how accurate product descriptions are, and no matter how perfect your order accuracy is, returns are inevitable for 3PL operations. For that reason, you need a solution capable of providing clients with full insight into every phase of the order fulfillment process: receiving, packing, shipping, delivery, billing, and returns

Logiwa has years of experience helping 3PL clients improve their returns management operations. In fact, some of our largest clients like ShipCube and PackDash started outperforming their competitors just 3 weeks into using our 3PL WMS

To learn more about how Logiwa handles returns management and reverse logistics, reach out to our warehousing experts or request a demo today.

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