Spotlight on Reverse Logistics

This is an excerpt of the original article. It was written for the January-February 2024 edition of Supply Chain Management Review. The full article is available to current subscribers.

January-February 2024

Back in 2019, we seemed on a consistent path to the future. Then COVID-19 arrived on the global scene, and all predictions went out the window. As 2024 begins, everyone wants to know what the year will look like. I predict continued interest in circular supply chains, cybersecurity, visibility, and digital supply chains, to name a few. But I am not alone. So, I’d like to share five things that I am particularly interested in this year.

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In the last few years, tech companies such as PayPal, Affirm and Shopify sold or closed their reverse logistics operations. At the same time, the number of reverse logistics companies (or those companies that touch some part of reverse logistics) continues to explode.

According to data from the Reverse Logistics Association (RLA), there are more than 5,000 companies in its database of companies involved in some way with reverse logistics. Tony Sciarrotta, executive director of the RLA, said the problem with the market is that it is very fragmented. The industry, he said, is more than $860 billion just on the B2C end. The total reverse logistics market is much larger, and according to a research study by Global Market Insights, will surpass $1.6 trillion by 2032.

Estimates on the number of returns for online purchases vary, but roughly 20% is a good estimate. Sciarrotta said B2C was about 17% of sales in 2022, up from just 7% to 8% of sales in 2016. “These numbers reflect returns at retail value back to the retailer or e-tailer. Some inventory goes back onto the shelf. Maybe 50%, but it could be higher,” he tells Supply Chain Management Review.

With such a fragmented market, it is no wonder that firms are being bought and sold. In 2023, UPS acquired Happy Returns from PayPal, indicating that while some companies are looking to divest their reverse logistics operations, others are only too happy to expand theirs. UPS also acquired Optoro, an all-in-one returns platform. Happy Returns offers “returns bars” where customers can bring unboxed items for returns.

Affirm simply closed its Returnly operation last year while Shopify, which purchased Deliverr a few years ago, sold the company to Flexport. Blue Yonder acquired Doddle and even Accenture got into the act, announcing in November it was acquiring OnProcess. The question, then, becomes if reverse logistics is growing so fast—and becoming such a critical part of the customer journey—why is the market so unsettled?

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