Why You Should Use a 3PL for Reverse Logistics and Returns
July 26, 2022
by Rebecca Fox

Wouldn’t it be nice to be able to sell your products without having to spend your time overseeing how they are received, distributed, and returned?

Processing returns can be expensive, time-consuming, and labor-intensive, but you don’t have to handle it all yourself. 

One way to make the eCommerce returns process easier is by outsourcing your reverse logistics to a company that specializes in transportation, handling, and restocking. These external logistics companies are called Third-Party Logistics providers (3PLs)

Using a 3PL is becoming more and more prevalent – 40% of retailers use a 3PL to handle returns. Read on to see if using a third-party logistics provider might be a good idea for your business too.

What is a 3PL?

Third-Party Logistics (3PL) companies manage inbound and outbound shipments and fulfillment. 

With a 3PL you can automatically generate return shipping labels, track return shipments, and be sure that returned products are processed and restocked or disposed of appropriately.

When customers return an item, it arrives back at the 3PL warehouse. The 3PL team inspects the item and lets you know that the refund or store credit is ready to be processed on your end. Once they’ve assessed and confirmed the item is resellable, they place it back on the shelf to fulfill a future order.

Why Use a 3PL?

Using a third-party logistics provider to manage your Shopify store’s reverse logistics can save you both time and money.

Having an efficient reverse logistics solution facilitates fast and easy returns, making customers more likely to exchange or buy again. Efficient resell, recycling, and disposal solutions also help your store recover product value.

Since reverse logistics is such an important part of every eCommerce business, it’s a smart choice to assign this process to a fitting type of service provider.

Scalability

You don’t necessarily know how much warehouse space you’re going to need months and years down the line. 

A 3PL can relieve some of the guesswork that comes with the expansion and contraction of your business by offering flexibility as you grow or experience setbacks. Need more space? It’s there. Need fewer hands on deck? Consider it done.

When you use a 3PL you can easily scale your Shopify business while mitigating some of the financial risks.

Quality Control

Inspecting returned items can be delegated to a 3PL that provides dedicated staff members who decide if items should be discarded, recycled, or restocked, based on your store’s conditions.

3PLs are also responsible for maintaining your inventory through cycle counts, labeling, and reporting. By handing over your inventory to the care of a 3PL, you can relax knowing your products are being taken care of.

Fast and Easy Returns

When it comes to fast shipping and easy returns, Amazon is one of the first companies that come to mind. One of the reasons Amazon is able to offer easy and convenient returns is because they have strategically-located warehouses all over the world.

You too can streamline your returns process and make returns easy by having a 3PL handle your inventory using their network of warehouses.

For example, take Flexport D2C Fulfillment (formerly Deliverr), a 3PL that has an interconnected network of warehouses that enables you to easily receive returned items all across the country. Being able to quickly and efficiently receive and process returns anywhere in the country gives your eCommerce business a huge advantage over others.

A streamlined returns process encourages repeat business, brings down your expenses, and reflects well on your store. Just like fast shipping can increase sales, so can efficient returns.

Package Tracking

The best 3PLs provide you with a complete tracking system and comprehensive returns management abilities. You’ll be able to know exactly when items were received, assessed, and restocked.

Integrating a 3PL into your returns management system lets you efficiently handle the entire returns process from start to finish, and have all the relevant information synced up at all times.

Knowing what’s going on with your returns at any given time can give you peace of mind and enable you to focus your time and energy on other tasks.

How to Choose the Best Shopify 3PL for Your Store

When choosing a 3PL reverse logistics provider for your Shopify store, there are some key features to consider.

  • Number of Locations
    Choose a 3PL that has multiple fulfillment centers strategically spread out across the country – the more the better. 

    Having a wide network of warehouses makes it quicker and easier to receive return shipments, making your whole process more efficient.
  • Ease of Integration
    The best Shopify 3PLs will be easy to integrate into your store and other eCommerce management apps so that you can easily manage every aspect of your returns process in one place. 

    Integrating your 3PL with your Shopify store helps streamline your reverse logistics and simplify your workflow. 
  • Usability
    Your Shopify 3PL should have an easy-to-use interface that provides real-time notifications and detailed reporting so that you can track all your return shipments and make sure everything is in sync at all times. 

    A user-friendly 3PL app saves you time and money and reduces human error.

Before starting to work with a 3PL, research Shopify 3PLs, read reviews, and compare information to make sure you’re choosing the best possible 3PL for your Shopify store.

How to Work With a 3PL for Returns Management

Effectively working with a 3PL provider for returns management requires a clear understanding of the process, the roles and responsibilities of each party, and the steps needed to establish and maintain an effective partnership. 

Here are the key steps of working with a 3PL provider for reverse logistics management, including defining roles and responsibilities, establishing clear processes and protocols, setting performance expectations and metrics, building collaborative relationships, and continuously improving processes. 

By following these steps, you can effectively work with a 3PL provider and ensure that your returns process goes smoothly:

1. Establishing Processes and Protocols with Your 3PL

To work effectively with a 3PL for returns management and reverse logistics, it’s important to establish clear processes and protocols upfront. Set expectations for the following:

  • Define roles and responsibilities Clearly define the roles and responsibilities of your business and the 3PL provider. This will help to minimize confusion and ensure that everyone understands their role in the reverse logistics process.
  • Establish procedures for handling returns – Outline the procedures for how returns will be handled, from the moment the item is received by the 3PL to the point when the refund is issued. 

Be sure to include details on how items will be inspected, how refunds will be processed, and how customers will be notified of the status of their return.

  • Detail the technology and tools to be used – Determine the technology and tools that will be used to manage the reverse logistics process, such as inventory management software and communication tools. 

Make sure that both your business and the 3PL are using the same tools to minimize errors and miscommunications.

2. Setting Performance Expectations and Metrics

To ensure that your 3PL is meeting your business needs, it’s important to establish clear performance expectations and metrics. 

Identify goals that you would like to achieve, such as:

  • Identify key performance indicators (KPIs) – Identify the KPIs that will be used to measure the 3PL’s performance, such as the time it takes to process a return or the accuracy of the inventory tracking system. 

Be sure to clearly define each KPI and how it will be measured.

  • Establish clear goals and expectations – Clearly communicate your goals and expectations to the 3PL, including what you expect in terms of turnaround time, accuracy, and customer service. 

Make sure that the 3PL understands your business’s priorities and how they can support those goals.

  • Monitor and assess performance – Regularly monitor the 3PL’s performance against your established metrics, and be prepared to provide feedback and guidance as needed. 

Establish a process for addressing issues that arise and a plan for making improvements over time.

3. Collaboration and Relationship Building with Your 3PL

A positive and collaborative working relationship with your 3PL is key to effective reverse logistics management. 

  • Establish open communication channels – Set up clear and effective communication channels with your 3PL, such as regular check-in calls or a shared project management tool. Make sure that both your business and the 3PL know who to contact with questions or concerns.
  • Build trust and rapport – Invest in building a positive and collaborative relationship with your 3PL. This may include visiting their facility, attending industry events together, or hosting joint training sessions.
  • Address conflicts and issues Be prepared to address conflicts and issues that arise in the course of working together. Establish a process for escalating issues and a plan for resolving them.

4. Evaluating and Optimizing Your 3PL Partnership

To ensure that your 3PL partnership is meeting your business’s needs over the long term, it’s important to regularly evaluate and optimize the partnership. 

  • Review and assess performance regularly – Schedule regular performance reviews with your 3PL, and be prepared to provide feedback and guidance. Use this feedback to make adjustments and improvements to the partnership over time.

Track metrics such as the number of returns processed, the cost of returns, and customer satisfaction levels. By identifying areas where performance can be improved, you can take action to address those issues and optimize your returns process.

  • Identify and address bottlenecks in the process – To continuously improve your reverse logistics, identify and address bottlenecks in the returns process. This may include delays in receiving and processing returns, inventory management issues, or communication problems with customers or the 3PL provider. 

By identifying and addressing these bottlenecks, you can streamline the reverse logistics process and reduce costs.

  • Stay up to date with industry trends and best practices – Staying up to date with industry trends and best practices can help you continuously improve your reverse logistics process. You can do this by attending industry conferences and events, reading trade publications and blogs, and networking with other eCommerce store owners and managers. 

By staying informed about the latest trends and best practices, you can identify new opportunities to optimize your reverse logistics process and stay ahead of the competition.

Outsource Your Returns Process

Why should you do everything yourself when you can simply outsource the hassle of handling returns?

Just as you pay to use internet service instead of going all around the world and laying down wires by hand, you can outsource reverse logistics.

Your eCommerce success is greatly affected by the extent to which you understand and anticipate trends and innovations in returns. The future of eCommerce returns undeniably relies on third-party logistics.

ReturnGO easily integrates with a variety of 3PLs such as Flexport to optimize your reverse logistics and make sure returns are handled quickly and effectively.

Outsource your reverse logistics to a 3PL and focus on doing what you do best – running your growing business.

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