Why Logistics Matter in Reverse Supply Chain Management

All retailers and consumer brands face the challenge of returned and surplus inventory. In both cases, businesses see their margins diminished after reimbursing buyers and utilizing valuable storage space to hold all of the surplus.

The key to solving the problems of excess returns and surplus inventory is through a reverse logistics strategy. With a well-run reverse logistics program, retailers and consumer brands can ensure seamless, efficient fulfillment of these goods to their final locations, whether those are end users, vendors, or recycling centers.


How Does Reverse Logistics Benefit Retailers and Consumer Brands?

Reverse logistics is the process of fulfilling overstock and returned inventory by moving the items to their new homes with customers or back to the vendor. Returns, in particular, are difficult for retailers to manage. Strict return policies can turn customers away, but overly generous policies can lead to a glut of returned merchandise that must be sold or returned to the vendor as appropriate. Here are three benefits your company will experience from getting reverse logistics right:

  • Maximize value for returned and overstock goods by shipping, reselling, or sustainably disposing of them as appropriate.
  • Avoid taking up valuable storage space with overstock and returned goods.
  • Deter returned and overstock goods from the landfill. This can be tied into wider corporate social responsibility strategies, particularly ones based on sustainability and environmental stewardship. This is a measurable way to show socially conscious consumers that your brand is aligned with their values.


How Liquidity Services Manages Reverse Logistics

A reverse logistics program requires a considerable amount of attention to tap into the full benefits of the process. Many companies simply don’t have the time or resources to handle this aspect of business. In addition to managing and selling your surplus goods, Liquidity Services provides efficient “one touch” logistics for the entire reverse supply chain, from returns assistance through shipping and payment support.

We have eight fulfillment centers across North America totaling over one million square feet of storage space. This reach results in lower shipping costs and quicker processing and fulfillment, with deliveries usually leaving our warehouses on the same day as or next day after the order. And the faster buyers’ orders are processed, the faster you get paid.

Our flexible reverse logistics solutions are customized to your specific needs. We ensure all returned goods are accounted for and end up in the right place according to your predetermined agreements with vendors. Whether your goods are returned to vendor from the retailer (RTV), returned to vendor directly from the consumer (RMA), resold, or recycled, we make sure your reverse supply chain operates efficiently and effectively.


Case Study: Reducing Freight Costs and Increasing Return on Retail Surplus Inventory

A major U.S.-based wholesale retailer was experiencing countless interruptions and failures in its reverse supply chain due to the uneven delivery of goods, undocumented shortages, payment issues, and other difficulties. After trying to solve these problems on its own, the retailer realized that its reverse supply chain management was taking too many resources away from core business efforts.

Liquidity Services stepped in and tapped our extensive regional network to offer a customized solution that allowed for parcel/LTL shipments to occur at the retailer’s convenience with an initial upfront payment to enable ease of store operations. We picked up the freight costs, used three transparent online sales channels, and created an integrated revenue share structure to ensure the retailer maximized recovery on its goods. Additionally, this arrangement was flexible enough to handle spikes in inventory flow during the holiday season and inventory restock, all while ensuring compliance with regulations.

Liquidity Services’ solution improved overall service levels for the retailer and recovered a net rate of return of 37 percent, while freight costs were reduced by more than $200,000 annually, and legacy shipping issues were eliminated. It also made reverse supply chain management easier for store employees and management. We provided quarterly asset recovery reports that helped upper management improve vendor quality and make better decisions about pricing and inventory flow.