External Factors

Brand Development

To preserve or develop your brand is becoming increasingly difficult for companies. In the case of consumers, the brand affinity is decreasing due to the transparency and convenience which the online trade offers. Reverse logistics offers opportunities in order to differentiate between the competition and brand maintenance.

  • PRO
  • Speed, service and positive customer experiences are increasingly being considered to be important to the customer and contribute to improving brand loyalty.

  • A transparent, convenient and customer-oriented return process creates a positive customer experience.

  • The structure of the return process from the purchase to the payment to the take-back and refund follow strategic principles. In its own online shop, the seller has the greatest control over the framework conditions – from the product information and product presentation, to the payment methods, including the technical modalities of the delivery and return.

  • Customers interpret a good will return option as a sign of high product quality. This then strengthens the brand itself.

  • Internet marketplaces create rigid framework conditions which the seller may influence only to a limited extent. Higher return rates are the consequence.

  • In marketplaces, fewer opportunities exist to steer the brand development.

  • If returned items are sold at dumping prices in an uncontrolled manner, this weakens the brand.

  • Returns in the online trade are inevitable. To ignore this theme that is important to customers damages the brand over the medium- and long-term.


The promotion of returns is a preventative strategy in order to increase the number of returns. From a business management perspective, this measure makes sense for a positive net return value. With the goal of sales promotion, for example, old devices are accepted as payment. The refurbished old device (upcycling) is resold in the secondary markets. Above all in B2B, buy-back agreements are customary whereby a new purchase is made in conjunction with the return.

  • PRO
  • Besides with regards to costs, returns processing can also make a positive value contribution: Sales promotion through the take-back and upcycling with resale.

  • The product price remains – to a certain extent – constant.

  • Actively improving customer loyalty by allowing customers to exchange old products for new products.

  • Competitive advantages are created since the market share is preserved by both old and also new products being placed on the market.

  • Risk of price erosion.

  • Risk of cannibalization: The trading of refurbished devices can destroy the market for new goods.

  • Risk of damaging the image and thus the brand if old products are sold by third parties in an uncontrolled manner.

  • As a fundamental prerequisite, customers must be informed of the existence of the pick-up and recycling system.

Participants in the Return Process

Reverse logistics are determined above all by these four participants: Consumer, seller/shipper, carrier, service provider (external partners). An efficient, success-oriented return management system takes into consideration all participants, their characteristics and their needs.

  • PRO
  • Positive experiences with the return management increase the customer value.

  • The knowledge of customer expectations for the return process is important in order to then tailor one’s own activities to those expectations.

  • Shippers can positively influence the brand value through good customer service which includes a customer-oriented returns processing system.

  • Shippers must establish an effective returns processing system in order to minimize costs and, where applicable, generate value growth originating from the refurbishment and resale of returned products.

  • Shippers should formulate their individual returns strategy in a targeted manner via preventative measures (prevention, avoidance, promotion).

  • Carriers make their contribution through fast and punctual delivery, transparency as well as flexible take-back options for the transport of returns.

  • External service providers can be integrated for the complete processing or only for partial aspects such as refurbishment or resale to secondary markets.

  • Companies which opt for internal processing assign returns management greater strategic importance than companies which outsource activities.*

* Return Management in the Mail Order Business, Asdecker, 2014
  • For shippers, the localization of the return processing is complex.

  • The return volume can be forecasted over the course of time only with difficulty which complicates the planning for the shipper, the carrier and the external service providers.

  • The goods to be transported sometimes have no or unsuitable transport packaging, are soiled or defective which makes transport more difficult (e.g. due to leaking fluids).

  • The shipper and the carrier must attend to the integration of the return data into the existing information systems.

  • Regardless of whether it is done internally or by external service providers: The return assessment is labor-intensive; an automation based upon the heterogeneity of the goods is possible only in a restricted manner. The identification of the best recycling alternatives for C- and D-returns is frequently difficult.

  • The integration and coordination with the future-oriented value-creation system are necessary (e.g. quality assurance, marketing, sales, purchasing).

Decision-Making Process

In order to efficiently design the return management, the orientation to the principles of project management helps. For the sake of practically-oriented completeness, the “magic triangle” of quality, costs and time (speed) are supplemented by the content and/or the scope (“Devil’s Square”). Along these four dimensions, planning and operational processes can be defined, assessed and optimized.

Scope of Service, Content
  • Make-or-buy: Internally-rendered returns processing or outsourcing.

  • Decision regarding the deployment of preventative returns management measures.

  • Preventative measures for the reduction of uncertainty upon the buyer’s side in order to avoid returns.

  • The return option is a sign to the customer of product and service quality.

  • Returns controlling with the monitoring of central logistical, economic and operational key indicators provides indications of weak points and the required optimizations of planning and operational processes.

  • The returns management helps to develop competences, based upon which competitive advantages can be generated.

  • The resources made available (personnel, technology, locations) influence the success of the returns management system.

  • If a market-related differentiation strategy is selected, the focus is on customer satisfaction instead of costs. The returns management is to be designed in such a manner that customers perceive it to be part of a unique service.

  • Four factors influence customer satisfaction: The returns processing time, the relationship quality between the shipper and the recipient of the return, the return expenditures as well as the refund policy. *

  • Errors in the transaction processing result in an increase in the return rate.

  • Target group-specific sales and return services take into consideration the customers’ expectations, age and gender as well as the industry and/or product group and result in higher customer satisfaction as well as better processes.

  • Transparency for the customer with regards to the returns process creates trust and strengthens customer loyalty.

  • An effective planning, steering and controlling of the return flows require a corresponding database as well as technical resources and a digital infrastructure.

  • The forecasting precision influences the planning quality during the determination of which returns should be processed at what time and at what location.

* Return Management in the Mail Order Business, Asdecker, 2014
  • TIME
  • If the loss of value of the returned products is high, the processes must be designed to be as agile and flexible as possible in order to minimize the returns processing time.

  • If the returned goods lose value only slowly or not at all, a structure that is as cost-efficient as possible should be favored.

  • Customers expect a short processing time – above all with regards to the refunding of the purchase price.

  • Fast and punctual delivery to the customer reduces the return rate.

  • Customers prefer a free-of-charge return.

  • Customers are willing to pay for additional services, e.g. for the pick-up of the goods to be returned (convenience).

  • One of the main goals of the returns processing is the reduction of the costs associated with the returns management.

  • Make-or-buy: Outsourcing of the returns processing offers potential cost-savings, but this is not always the case in practice.* The high percentage of manual work steps calls for lower wages (which may be realizable only abroad) versus more extensive automation and processes that are more intelligent.

* Return Management in the Mail Order Business, Asdecker, 2014