Third-Party Reverse Logistics: Supporting Brands Through Sustainable Commerce

Dennis Hoang

— 7 min read
Third-Party Reverse Logistics: Supporting Brands Through Sustainable Commerce

In traditional commerce, the exchange of goods from manufacturers to consumers is a fairly straightforward process. A customer gives a business their money and, in exchange, they receive a new product.

But what happens to products that are ordered online, opened, tried on, and then returned? Statistically, 24.4% of online apparel orders get returned, meaning these items can no longer be sold as “new”, throwing off our traditional cycles of commerce. Often someone will make an online purchase of a shoe in three sizes and return the two that don’t fit, resulting in two pairs of shoes that can’t be put back on the shelf but have never actually been worn. 

Similar to how a car immediately depreciates immediately when you drive it off the lot, once an item is no longer brand new in it’s original packaging, it can no longer best sold for the original manufacturer suggested retail price (MSRP). 

And challenges don’t stop there. Often companies will offer free returns for online purchases, meaning they not only end up with inventory they can’t sell, they’ve also now taken a loss by paying for shipping costs twice. ​​It’s estimated that in 2023, there were $38 billion dollars in returned inventory with an estimated $25.1 billion dollars in processing costs. 

This returned inventory will then continue to grow, unsellable as new, occupying valuable warehouse storage that would otherwise be dedicated to bringing in next season’s items.

Reverse logistics is the solution to this compounding problem. Companies like Jender purchase pallets of returned, new and like-new items, helping the company free up warehouse space and recoup some of their financial loss. Then these items are sold in a process called “recommerce”, being sold to consumers at discounted rates on sites like ebay, Poshmark, or resell websites. 

Reverse logistics plays a crucial, albeit lesser-known, aspect of the supply chain.

What is Reverse Logistics?

Reverse logistics is the process of moving goods from their final destination back to the manufacturer or point of origin for the purpose of return, repair, remanufacturing, recycling, or disposal. Unlike traditional logistics, which focuses on the forward movement of goods, reverse logistics manages the reverse flow of products and materials. This often keeps quality, functioning products out of landfills while making high-end designer goods more accessible.

The Reverse Logistics Process

Reverse logistics involves several key stages, including product returns, remanufacturing, recycling, and disposal. The process begins when a customer decides to return a product for any reason, such as defects, damage, or simply a change of mind. The returned product is then inspected to determine its condition and whether it can be resold, repaired, or recycled.

If the product is in good condition, it may be restocked and resold to another customer. If the product is damaged or defective, it may be repaired or refurbished before being resold. If the product cannot be resold, it may be disassembled and its components recycled or disposed of in an environmentally responsible manner.

Reverse Logistics is Good for Both Consumers and Businesses 

For many businesses, effective reverse logistics can lead to cost savings through improved inventory management, reduced waste, and increased resource recovery. It also helps enable businesses to comply with regulatory requirements related to product recalls and disposal, ensuring that they operate legally while maintaining customer satisfaction.

From a consumer perspective, this gives buyers the opportunity to purchase items like dresses, shoes, or handbags at up to 95% off their retail price.

Benefits of Reverse Logistics

1. Cost Savings: When items get returned, they take up warehouse space that could otherwise be dedicated to new, higher-margin items. Having a third-party reverse logistics company, such as Jender, allows brands to focus on selling their newest products while still recouping some of the returned goods costs. 

2. Happy Customers: Reverse logistics is crucial for maintaining customer satisfaction and loyalty. By offering hassle-free return policies, businesses can build trust with their customers and enhance their reputation. Companies can manage to offer this services without much overhead by partnering with third-party reverse logistics companies.

3. Environmental Sustainability: Reverse logistics plays a key role in promoting environmental sustainability by reducing waste and conserving resources. By returning products to the manufacturer for redistribution, fewer products end up in landfills, reducing the environmental impact of disposal. 

4. Circular Economy: Reverse logistics promotes the concept of a circular economy, where products and materials are reused, repaired, or recycled to minimize waste and maximize resource efficiency. This shift towards a circular economy is crucial for mitigating the environmental impact of consumerism and fostering sustainable business practices.

Challenges of Reverse Logistics

While reverse logistics offers numerous benefits, it also presents several challenges for businesses. Some of the key challenges include:

1. Complexity: Reverse logistics is often more complex than forward logistics due to the unpredictable nature of returns and the need to manage multiple channels and partners. That’s why many brands decide to partner with a company like Jender to manage that for them. 

2. Cost: Reverse logistics can be costly for businesses, especially if products need to be repaired, refurbished, or recycled. Partnering with a third-party reverse logistics company allows brands to relieve themselves of those costs, instead getting a financial return for clearing warehouse space, ensuring that costs do not outweigh the benefits.

3. Regulatory Compliance: Reverse logistics involves compliance with various regulations related to product returns, hazardous materials management, and disposal. Jender stays up-to-date with these government regulations to relieve the potential liability on brands.

4. Customer Expectations: Customers have high expectations when it comes to returns and repairs. Businesses must meet these expectations to maintain customer satisfaction and loyalty if re-selling through their own channels. Third-party reverse logistics companies relieves that burden on brands. 

As businesses and consumers become increasingly aware of the importance of sustainability, reverse logistics is expected to play an even more significant role in the future. Some key trends to watch include:

1. Technology Integration: The integration of technology, such as RFID, IoT, and AI, will enable businesses to track returned products more efficiently and optimize reverse logistics processes. Jender operates on a proprietary software platform called Patturn, designed specifically to support a seamless end-to-end experience for partner companies.

2. Circular Supply Chains: More businesses are expected to adopt circular supply chain models, where products are designed for reuse, remanufacturing, or recycling from the outset. While these are great talking points for marketing, most companies don’t have the resources to manage reverse logistics for themselves.

3. Collaborative Partnerships: More and more businesses are forming partnerships and collaborations with brands like Jender to improve the processes, reduce warehousing costs, and get a quicker return on their returned or excess inventory.

4. Eco-Friendly Packaging: Companies such as Jender can help avoid expensive and inefficient re-packing fees that brands may otherwise have to manage. As a third-party reverse logistics company, expectations are managed with customers that products may be re-packaged in more eco-friendly ways to reduce waste and environmental impact.

Why Companies Needs Third-Party Reverse Logistics

Reverse logistics is a critical component of the supply chain that facilitates product return, repair, and recycling; however, it comes at a cost. Third-party reverse logistics companies can play a crucial role in business by ensuring customer satisfaction, reducing waste, and conserving resources. Moreover, it is essential for promoting sustainability and environmental stewardship in the business world. As businesses and consumers alike become increasingly aware of the importance of sustainability, reverse logistics will continue to play a vital role in shaping the future of commerce.

As businesses and consumers become increasingly aware of the importance of sustainability, reverse logistics is expected to play an even more significant role in the future. Some key trends to watch include:

1. Technology Integration: The integration of technology, such as RFID, IoT, and AI, will enable businesses to track returned products more efficiently and optimize reverse logistics processes. Jender operates on a proprietary software platform called Patturn, designed specifically to support a seamless end-to-end experience for partner companies.

2. Circular Supply Chains: More businesses are expected to adopt circular supply chain models, where products are designed for reuse, remanufacturing, or recycling from the outset. While these are great talking points for marketing, most companies don’t have the resources to manage reverse logistics for themselves.

3. Collaborative Partnerships: More and more businesses are forming partnerships and collaborations with brands like Jender to improve the processes, reduce warehousing costs, and get a quicker return on their returned or excess inventory.

4. Eco-Friendly Packaging: Companies such as Jender can help avoid expensive and inefficient re-packing fees that brands may otherwise have to manage. As a third-party reverse logistics company, expectations are managed with customers that products may be re-packaged in more eco-friendly ways to reduce waste and environmental impact.

Why Companies Needs Third-Party Reverse Logistics

Reverse logistics is a critical component of the supply chain that facilitates product return, repair, and recycling; however, it comes at a cost. Third-party reverse logistics companies can play a crucial role in business by ensuring customer satisfaction, reducing waste, and conserving resources. Moreover, it is essential for promoting sustainability and environmental stewardship in the business world. As businesses and consumers alike become increasingly aware of the importance of sustainability, reverse logistics will continue to play a vital role in shaping the future of commerce.

If you or your company would like to discuss a recommerce partnership with Jender, whether that it returns, liquidations, or out of season products, please contact us on our contact page.