Reverse Logistics
Managing product returns: collection, inspection, sorting, restocking, or recycling. Costs 2-3x regular shipping.
In practice
Every return costs: double shipping + labor + depreciation. A product returned in good condition can be resold at 80% of the price.
Common misconception
'Returns are a total loss.' A product returned in 95% condition can be resold. A refurbished pool offsets 40-60% of the cost.
How to fix it
Too many returns? (1) reasons: 'not as described,' 'damaged,' 'wrong size,' (2) a size guide / AR tool, (3) packaging, (4) a pickup point.
Example
A shoe store: 28% return rate, 75% due to 'wrong size.' A digital sizing tool cut it to 17%, saving $12,500/month.
Priority
Calculate the full cost of a return. Above 15% of AOV, fix the root cause.
Related terms
Keep learning. Metrics that touch the same area:
- 3PL – Third Party LogisticsLogisticsAn external company for storage, picking, packing, and shipping. The store owner sends inventory to the 3PL, receives orders, and the 3PL handles fulfillment.
- Last Mile DeliveryLogisticsThe final leg of shipping — from the logistics center to the customer's door. 53% of shipping costs.
- CarrierLogisticsA company that performs shipping: DHL, UPS, USPS, FedEx. Each has different pricing, speed, coverage, and reliability.
- Cross-Border CommerceLogisticsSelling internationally — currencies, languages, taxes, customs, shipping reliability.
- FBA – Fulfillment by AmazonLogisticsAmazon stores, packs, and ships for you. Includes the Prime badge and higher ranking. Fees: referral + FBA + storage.
- Safety StockLogisticsExtra inventory held beyond what average demand requires — protects against demand fluctuations, lead-time delays, and forecasting errors. Safety Stock = Z × √Lead Time × Demand STD.
Jimmy tracks your Reverse Logistics, automatically
WhatsApp alerts when something important changes. No dashboards, no hassle.