Subscribe to our free, weekly email newsletter!

UPS preps to launch new reverse logistics service for high-end items

By Jeff Berman, Group News Editor
June 14, 2011

UPS said it will be rolling out a new reverse logistics service geared towards high-end products for shippers in the high-tech, healthcare, and retail sectors in the United States, Canada, Europe, Mexico, and Puerto Rico, effective this October.

Entitled UPS Returns Exchange, company officials explained that the way it works is that a UPS driver delivers a replacement item while also picking up the item marked for return in the same visit to a place of business or a home. The UPS driver also provides assistance in packing the return item in the replacement box at which point it is shipped back to the original company. Customers are notified that a UPS driver is en route through an SMS message, e-mail, or voice alert.

UPS claims this service is an “industry first” in North America.

One of the main drivers for this service had to do with the myriad challenges of reverse logistics, said Sumeet Shroff, UPS Director of New Product Development, citing a statistic from Greve-Davis which stated that in 2010 U.S. consumers returned $200 billion worth of good and that manufacturers, including those in high-tech, spend 9-to-14 percent of their sales on returns even though only 20 percent of the goods actually returned are actually defective.

“When you look at these numbers, it is clear businesses spend a lot of money on returns and lose a lot of money on returns,” said Shroff. “There is an urgent need to turn that cash outflow into something that is positive.”

When it comes to managing returns, Shroff said a “one size fits all” returns solution does not make sense, explaining the way a return for a $20 item is handled compared to the return of a $2,000 item for many businesses are the same, which does not make sense.

UPS, he said, approaches this with a suite of returns services for customers to address their needs for differentiating ways of addressing returns services and processes for products of different values.

“This is focused on anything that is considered high value or high priority, and that is where we have a need to deliver the most value to our customers,” said Shroff.

A major shipper benefit of this service is speed of recovery, according to UPS.

In the medical device industry, for example, the average time to get returns back runs between 12-to-14 days, which stalls the process in which medical device manufacturers get compensated, as they only get compensation when a device is deployed with a customer or patient. And for every additional day it takes for a return to come back, revenues are lost. This is also key for consumer electronics, where speed is vital for refurbishing and re-selling things like smart phones.

Customer services as it relates to reverse logistics is also a major driver, said Shroff, noting that Forrester Research shows that 81 percent of consumers are more loyal to companies with a generous returns policy—an example of how businesses are missing opportunities to control costs while also improving their customer’s post-sales experience.

“It is far more efficient to re-pay the customer than the customer acquisition costs of going out and getting new customers,” he said. “That is another aspect that is driving the shift in demand for this service.”

Another benefit of this service is the sustainability angle, with the same box being used for the item shipped out and the item returned, as well as eliminating one delivery and saving fuel and reducing emissions, too.

While UPS Returns Exchange is focused on reverse logistics processes for high-end products, some shippers told LM that they are concerned about how this may impact overall shipping costs, explaining that unless UPS is charging upwards of
$10.00 for this service they will lose money on it.

“The extra time is going to expand costs on everything else the drivers do,” said a retail shipper.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in October at 135.7 (2000=100) was up 1.9 percent compared to September’s 133.1, and the ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment was 139.8 in October, which was 0.9 percent ahead of September.

The average price per gallon of diesel gasoline fell 3.7 cents to $2.445 per gallon, according to data issued today by the Department of Energy’s Energy Information Administration (EIA). This marks the lowest weekly price for diesel since June 1, 2009, when it was at $2.352 per gallon.

In its report, entitled “Grey is the new Black,” JLL takes a close look at supply chain-related trends that can influence retailers’ approaches to Black Friday.

This year, it's all about the digital supply network. In this virtual conference, we will define the challenges currently facing supply chain organizations and offer solutions designed to transform linear operations into dynamic, automated networks that offer seamless communication, visibility, and the ability to respond and optimize processes at any given time.

In his opening comments assessing the economy at last week’s RailTrends conference hosted by Progressive Railroading magazine and independent railroad analyst Tony Hatch, FTR Senior analyst Larry Gross said the economy continues to slog ahead at a relatively tepid pace, coupled with some volatility in terms of overall GDP growth. And amid that slogging, Gross said there is currently an economic hand-off occurring between the industrial sector and the consumer sector.


Post a comment
Commenting is not available in this channel entry.

© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA