Global Reverse Logistics Market 2021-2026

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    GLOBAL REVERSE LOGISTICS MARKET

     

    INTRODUCTION

    Reverse logistics is the supply chain activity in moving the goods from consumer or customer to the upstream of supply chain, the objectives of reverse logistics include: Maintenance, Reuse, Refurbish or Recycle of the product.

     

    infographic: Reverse Logistics Market, Reverse Logistics Market size, Reverse Logistics Market trends and forecast, Reverse Logistics Market risks, Reverse Logistics Market report

     

    Reverse logistics helps businesses in efficiently reducing costs, improve asset utilization and help in reduce the waste that reaches landfills. It plays a crucial role in realizing a circular economy, which helps in maximizing the recapture of material and reduces the material that ends up in landfills.

     

    MARKET DYNAMICS

     

    SI.no Timeline Developments
    1 Q4-2021 The Phoenix Group company received its patent from the United States Patent and Trademark Office for its software as a service product called Midas which is used for reverse logistics operations.
    2 Q4-2021 OPEX Logistics from Germany started using automation solutions to manage reverse logistics operations and to manage warehouses.
    3 Q1-2021 Amazon introduced its new policy for its customers to deal with reverse logistics issues, which is a returnless refunds service where customers can get a refund for the product but no need to return certain products.
    4 Q2-2021 G2 Reverse Logistics built a software to increase efficiency and revenue of returns by analysing the data in artificial intelligence and machine learning. 
    5 Q4-2021 FedEx entered the Indian market by investing $100 million Delhivery to assist its operations with a long term agreement. FedEx operates international logistics operations from India and Delhivery will assist FedEx by providing services in pickup, deliveries and return of products in India
    6 Q2-2021 XPO Logistics provides reverse logistics solutions for France based fashion e-commerce customers to manage return products by automating the warehouse. 
    7 Q2-2021 Narvar and Cycleon partnered to provide reverse logistics return solutions, Narvar provided technology driven solutions for customers and Cycleon operates full service in return management solutions.

     

    Some key drivers in reverse logistics market are:

    1. Increase in pressure to reduce the consumer products ending in landfills and efficient use of materials to reduce the soil pollution. This is mainly driven by the increasing restrictions by countries on waste disposal.
    2. Increasing raw material prices as some of them are hard to extract. Metals like Cobalt and Lithium are perfect example as costs are high because of complex extraction processes.
    3. Increase in pressure to improve customer satisfaction. E-commerce is one big player which is helping in driving this, as they provide the best customer service compared to the retail players, customer returns play a major factor of differentiation.
    4. Increase in pressure to keep the cost of manufacturing in check and achieve better competitive prices. A good example of this is related to the electronics industry, refurbishment is increasing in scale and efficient reverse logistics play a vital role.
    5. To keep the logistics cost under check reusable packaging material is making its way, automobile industry is improving this for the movement of the components in international trade, this helps them in keeping their costs in check.

     

    OBJECTIVES OF DIFFERENT INDUSTRIES FOR REVERSE LOGISTICS

    1. Textile and Garments Industry: recycling of clothes is a major trend that is catching up with wool, logistics players have a huge potential to connect the industry, designing an effective collection method plays a vital role for the logistics players. Companies like H&M are using their retail stores as collection centers but only limited to their own garments.
    2. Electronics Industry: some of the key metals that are used in building electronic components like lithium, cobalt and gold have good potential to be reused. With shorter product life cycle in the industry this industry has a huge potential base. One key challenge for the logistics players is building a scalable model as currently each maker is having his independent channel of collection.
    3. E-commerce: returns play a vital role in the e-commerce segment, this helps them in building trust with the customer, e-commerce logistics players have efficiently captured this and integrated this with the forward logistics. For most of the e-commerce players building a reverse logistics network plays a vital role.
    4. Automotive: Movement of auto components from service provider to vendor is still a logistics market that is yet not scalable I many regions in terms of logistics. These components are used for repairs and recycling. Another market is of packaging and dunnage material return movement which don’t have a separate logistics network as they have been integrated with the forward logistics.
    5. Pharmaceutical Industry: Most of the demand for reverse logistics is getting generated because of regulations regarding environment. It is concerned with the movement of expired goods from retail and wholesale players to upstream where they are properly disposed.

     

    E-COMMERCE: LEADING THE REVERSE LOGISTICS CHANGE

    With the ongoing growth of e-commerce, the volume of returned inventory continues to rise for logistics managers in a variety of industry sectors. But arguably, it’s U.S. retailers who have felt the greatest impact in recent years with over $400 billion in goods are returned in any given 12-month time frame. e-commerce sales had a much higher return rate than those of brick-and-mortar stores—between 15% and 30%. Look for reverse logistics to be the main reason shippers will continue to search for class B industrial warehouse space in particular.

     

    As of October 2020, in United States in real estate space, 3PLs accounted for 27.1% of the transaction volume for deals of 100,000 sq. ft. or more, compared with 22% for e-commerce occupiers.

     

    Key challenge for fashion apparel industry in e-commerce is that, reverse logistics include product value depreciation and time sensitivity. As the overall return rate continues to grow by 10% annually, a higher amount of inventory is subject to depreciation. Apparel depreciates by 20% to 50% of its value within 8 to 16 weeks, creating urgency to get inventory back into circulation and ready for resale.

     

    infographic: Reverse Logistics Market, Reverse Logistics Market size, Reverse Logistics Market trends and forecast, Reverse Logistics Market risks, Reverse Logistics Market report

     

    Most of the companies are inclined to outsource their returns management to third-party logistics (3PL) providers in order to free up space for forward logistics. This has created a significant amount of opportunity for the 3PLs specializing in the reverse loop, including XPO Logistics, Ryder and NFI.

     

    Social media impulse purchases are another factor to increase the returns as many companies are increasing their returns policy from 28 days to 45 days to attract more customers.

     

    In US big retail players do use algorithms to decide on the returned items, algorithms suggest them if item sells for new, what it sells for on the secondary market and what generation technology an item is or has. Retailers can then decide if they want to sell it new at full price, sell it at a deep discount, resell it to a discounter, recycle it or liquidate it.

     

    This space is rapidly growing with 3PL competing very hard to grab the reverse logistics market with recent acquisition of Pittsburgh-based GENCO, a third-party logistics (3PL) services provider specializing in product lifecycle and reverse logistics by FedEx shows the focus by 3PLs.

     

    RECENT TRENDS IN THE REVERSE LOGISTICS MARKET

     

    infographic: Reverse Logistics Market, Reverse Logistics Market size, Reverse Logistics Market trends and forecast, Reverse Logistics Market risks, Reverse Logistics Market report

     

    SI.no Timeline Company Developments
    1 Q3-2021 FedEx Walmart partnered with FedEx to pick up its returned items from customers for service called ‘Carrier Pickup by FedEx’. 
    2 Q4-2021 Delhivery  Indian based Delhivery startup offers a full suite of logistics services like warehousing, end to end supply chain services, reverse logistics and many more services and also collaborated with FedEx to expand its business.
    3 Q1-2021 Kohl US based retail network Kohl is partnered with Amazon to accept its returned items at its stores without any return cost to the customers. 
    4 Q4-2021 Returnmates Returnmates startup from Los Angeles started its services in picking up the return orders from online orders and packages it in a warehouse before handing it to the courier.
    5 Q3-2021 United Parcel Services  Stericycle is partnered with United Parcel Services to deal with its medical waste in a reverse logistics process. 
    6 Q3-2021 GEODIS GEODIS provides reverse logistics services by using ShopRunBack, a French based startup’s platform to manage returns from consumers.

     

    It’s no longer possible to think about reverse logistics as a stand-alone capacity. As a standard process, it should be effortlessly integrated into the end-to-end supply chain.

     

    Reverse logistics encompasses many areas across the organisation, including returns management, sales, finance, warehousing, logistics, recycling management, and environmental compliance, and ranges from product returns to refurbishment and repairs to recycling of packaged materials and disposing of end-of-life products. It’s also an important part of the customer experience.

     

    Shippers want efficient reverse logistics to recover value from returned and damaged goods while simultaneously satisfying demands from all stakeholders to reduce environmental impact.

     

    Shippers require a revolutionary approach to reverse logistics that includes analytics, process optimization, and changes to the operating model, and that extends across the entire supply chain so that reverse logistics is included into core operations.

     

    In a word, businesses must figure out how to make the returns process more customer-friendly while also considering the total cost of returns and the impact on the environment.

     

    Improving data will result in more useful insights. With limited data and analytics capabilities, many shippers have made headway in improving reverse logistics by fine-tuning policy and enhancing process efficiency.

     

    However, in order to get full value, they’ll require strong data management and analytics skills to completely change and modernise operations that are now highly manual for most shippers.

     

    Furthermore, acquiring and integrating a diverse range of data types from many business domains is a significant problem. Instead of only analysing expenses, new data analytics can assist uncover consumer fraud, reduce the cost-to-serve of returns, and boost the earnings effect of returns.

     

    While many shippers are still focusing on developing internal analytics capabilities and organisations for their core businesses, inventory management, sales, and pricing, third-party solutions can provide tracking and dispositioning capabilities that help unlock reverse logistics value more quickly.

     

    The operating model should be updated. Many reverse logistics initiatives fail because shippers fail to consider the operational model adjustments required to enable and sustain effective reverse logistics management. Reverse logistics is inherently cross-functional, involving sales, marketing, merchandising, financing, distribution, and customer service, just as forward logistics does.

     

     

     

    COMPETITIVE LANDSCAPE

    SI.no Timeline Company Developments
    1 Q4-2021 Kohl Kohl made $1.9 billion in sales revenue in its third quarter with 15% rise from its previous quarter. 
    2 Q1-2021 ReverseLogix  ReverseLogix startup raised $20 million funding Cambridge Capital in its first round of funding, the company provides its services in e-commerce firms by automating the reverse logistics in cloud based platform.
    3 Q4-2021 NFI Industries NFI Industries is a third party logistics provider announces its third quarters revenue of $492 million.
    4 Q4-2021 GXO Logistics GXO Logistics announced $2 billion earnings in its third quarter results with a rise of 20% from last year’s same period.
    5 Q3-2021 Delhivery Delhivery acquired bengaluru based Spoton Logistics for $300 million to maximize its logistics operations across the country.

     

     

    COMPANY PROFILES

    Sl no Topic
    1 Market Segmentation
    2 Scope of the report
    3 Abbreviations
    4 Research Methodology
    5 Executive Summary
    6 Introduction
    7 Insights from Industry stakeholders
    8 Cost breakdown of Product by sub-components and average profit margin
    9 Disruptive innovation in the Industry
    10 Technology trends in the Industry
    11 Consumer trends in the industry
    12 Recent Production Milestones
    13 Component Manufacturing in US, EU and China
    14 COVID-19 impact on overall market
    15 COVID-19 impact on Production of components
    16 COVID-19 impact on Point of sale
    17 Market Segmentation, Dynamics and Forecast by Geography, 2021-2026
    18 Market Segmentation, Dynamics and Forecast by Product Type, 2021-2026
    19 Market Segmentation, Dynamics and Forecast by Application, 2021-2026
    20 Market Segmentation, Dynamics and Forecast by End use, 2021-2026
    21 Product installation rate by OEM, 2021
    22 Incline/Decline in Average B-2-B selling price in past 5 years
    23 Competition from substitute products
    24 Gross margin and average profitability of suppliers
    25 New product development in past 12 months
    26 M&A in past 12 months
    27 Growth strategy of leading players
    28 Market share of vendors, 2021
    29 Company Profiles
    30 Unmet needs and opportunity for new suppliers
    31 Conclusion
    32 Appendix

     

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