Reverse logistics is how companies recoup value from returned products—whether they were damaged, in poor condition, or the customer changed their mind about the purchase. It’s a complex process and just as important for effective supply chain management as traditional “forward” logistics.
Also known as returns management, ecommerce companies with international shipping need to establish their reverse logistics before launching into new countries. Each return shipment needs to have the correct return label and customs documents. Plus, there is the reclamation process to consider, which means getting back duties and taxes paid on the original import.
How Do Returns Work for International Orders?
Online shopping has become a standard buying preference for many industries. While some ecommerce brands still promote in-store returns, it’s often not an option for international returns. The rise in popularity of ecommerce has also changed the way many companies do business, capitalizing on the trend that it’s now imperative to offer an easy return solution.
“We found that reverse logistics has become an increasingly important part of brands going international. For some brands, reverse logistics is a critical part of their business.”
Many brands expect customers to buy more items than they intend to keep, with the understanding that many of items will be returned.
For some brands the system of returns is their core business model: a clothing company for example might encourage customers to order multiple sizes, try them on at home, and send back the ones that don’t fit.
Where this model gets tricky is when a brand wants to start shipping into a new market, or into a new country. Before launching they need to understand every detail of how to manage international reverse logistics.
Giving the Best Return Policy to International Customers
Before launching in a new market, make sure your customers there will have a great experience with your brand. Streamline the entire process for your customers, including your return policy and how customers will get their products back to the return destination.
User error is a huge issue of reverse logistics. Make the return process easy for your customers by giving them simple return instructions—like how to generate the correct shipping label and getting the right return address.
Many brands offer free returns. It’s an incentive for customers to buy more items, in the hopes that they don’t plan to return them all. Where free returns aren’t feasible, many returns platforms offer brands the opportunity to offset returns cost by assessing restocking or handling fees.
It’s important to keep your customer informed in reverse logistics. Send a confirmation email return that their product has arrived at the return center and verify your customer’s funds have been replenished.
Top Tips When Managing Global Returns
Reverse logistics is a complex and difficult aspect of ecommerce. It’s an area where brands often lose money. For example, your company will absorb the shipping costs for sending products both to customers and from customers, without the income from a sale. Consider the fact that many returns come back damaged, which means you won’t be able to repurpose or refurbish the items to resell.
The best thing to consider when managing international returns is to try and get your overall return rate as low as possible. If returns are part of your overall business model, do a thorough job of costing out all expenses and including them in the overall price of your product. Even if you’ve done this for domestic shipments, it’s worth it to re-do it for international shipments as they will incur different costs.
Here’s a list of top considerations to make when shipping internationally:
1. Survey your partnership options.
Different experts will influence your route, transit times, cost, and overall customer experience. The reverse of these is just as important as the initiation.
2. Investigate the costs.
Shipping fees are a massive part of logistics, and return costs tend to get extremely expensive. There are many small fees that can add up. Reviewing your costs regularly will eliminate paying extra.
3. Track your data.
Whether you encourage customers to return items or not, the bottom line is you want to limit returns as much as possible. By tracking the items that have the highest return rates and the reasoning, you’ll be able to iterate accordingly. Or at least promote the items that are returned the least.
5. Consider the scope of the country.
When shipping to Canada, for example, there will be very different induction points for customers in Toronto versus in Saskatchewan. It is possible to find direct ship options to specific regions of the country, to return faster and consolidate options for cheaper returns.
6. Get your labeling and regulations straight.
Are you shipping dangerous goods? Even if an item doesn’t need special packaging in the US, it might in another country. When shipping across borders, especially airfreight, there are strict regulations and packages must be labeled correctly with the proper classification and compliance.
“Some brands may not realize that nutritional supplements, beauty supplies, and cosmetics are all products that have one order of magnitude more regulations in Canada, and then two orders of magnitude more regulations in the EU. That’s not even considering the specific country regulations within the EU.”
How Does Reclamation Work?
Brands often understand that when shipping internationally they will have to pay duties, taxes and tariffs, depending on the country and current trade relationships. But companies often don’t think about what happens to those fees if customers return products.
How do you reclaim your duties and taxes? What’s the process for that?
Just like most aspects of internationally shipping, it can get complicated. Most brands are not able to do it themselves, because it’s such a hassle.
“Reclamation is often the economic tipping point to whether cross border returns are viable for brands. It can also be a significant differentiator for them to offer duty and tax refunds to their customers, where many don’t. It’s so important to work with a partner like Passport because we have the solutions and experience in place to simply execute reclamation.”
How an International Expert can Help
One of the biggest challenges when managing returns is that it takes almost twice the amount of time to process a single return than it does shipping out one order.
To help offset the time, effort, and cost incurred by returned merchandise, working with quality, experienced partners will help streamline your reverse logistics.
A great fulfillment partner can help process the returned goods—either send them to get refurbished, dispose of them, or re-stock them. An international expert can help ensure you optimize your route, return shipping options, customer support, and reclamation.
“Passport has easy-to-use tools that help automate the process and help determine classification and regulations. We work closely with brands to uncover the right data—that paired with Passport’s tools and experience, it makes a very complex puzzle incredibly simple.”
There are so many variables when shipping internationally—no brand will be able to know all the details. Find partners who can help guide you through and give you a competitive edge.
If you’re looking for internationally shipping support, Passport Shipping is a great resource. They are a partner of DCL Logistics. Ecommerce brands who use DCL for fulfillment have seamless integration with Passport when they want to start shipping internationally. Reach out for a quote.