Top Trends in European Reverse Logistics in 2023
Reverse logistics – the process of managing the return of products from the end customers back to the seller, has become increasingly important for companies across Europe. The retail e-commerce industry continues to grow rapidly – according to Morgan Stanley’s forecast, the global e-commerce market is expected to expand from $3.3 trillion currently to $5.4 trillion in 2026.
In line with the growth of e-commerce, the reverse logistics market is also poised for strong growth. According to estimates from Data Bridge Market Research, it will reach $954 million by 2029, representing a compound annual growth rate of 5.3% during that period.
As e-commerce sales and customer expectations for easy returns continue to rise, reverse logistics capabilities are crucial for providing a good customer experience.
Let’s take a look at some of the top trends we expect to see in European reverse logistics in 2023.
Automated Return Management Systems
Many European companies still struggle with manual, paper-based return processes that are inefficient and lead to higher costs and more errors.
Retailers typically deal with an average product return rate of 17%, according to 2021 data from the National Retail Federation (NRF). However, experts note that return rates can climb as high as 30% during the peak end-of-year holiday shopping season. At these high levels, the reverse logistics process is primed for automation.
Consumers returned about $760 billion worth of goods in 2021, according to the NRF. Some analysts expect product returns to surpass $1 trillion this year. The enormous scale of returns is highlighting the importance of reverse logistics, prompting more companies to look for ways to better handle the process. Options for improvement include applying robotics and automation.
In 2023, we will see more companies implement automated return management systems that provide a seamless digital returns experience for customers. These systems track returns from initiation through the inspection, refund, and resale or disposal process. They reduce time, costs, and environmental impact.
Consumer goods companies and retailers will invest in these systems to gain visibility and control over the returns process.
Greater Focus on Refurbishment and Resale
Simply throwing away or disposing of returned goods is no longer sustainable or cost-effective. In 2023, more European companies will focus on refurbishing and reselling returned items. For consumer electronics, tools, appliances and other durable goods, this could mean fixing, replacing components, and reselling items as refurbished. For retail goods, this may involve repackaging items and reselling them. This trend will allow companies to maximize the value recovered from returns and also support environmental sustainability goals.
Partnerships with Specialized Service Providers
Managing reverse logistics in-house requires significant resources and expertise. In 2023, we will see many mid-sized European companies choose to outsource some or all of their reverse logistics operations to third-party specialists.
European logistics companies that are members of IFA, seek to join forces with their customers to design a reverse logistics process that not only benefits the environment but also generates a positive impact on business performance.
These service providers have the scale, infrastructure, and knowledge to handle returns efficiently. They are also able to resell or properly dispose of returned goods for maximum value. Using reverse logistics partners allows companies to focus on their core business while still providing a high level of service.