Reverse logistics is the work of bringing goods back from customers and deciding what to do with each one: receiving the return, grading its condition, repairing what can be repaired and selling it again. In online shopping, it mostly means handling returned orders. It is called "reverse" because the goods travel from the customer back towards the seller, the opposite way from a normal delivery.
Indian online shoppers return a large share of what they buy, especially clothes, shoes and electronics. A customer may change her mind, receive the wrong size or find a fault. Some goods also come back without ever being delivered, when a cash-on-delivery parcel is refused at the door, as the page on cash on delivery and RTO explains. Each return costs the seller money. And if the returned goods simply wait in a warehouse, they lose value every month, because newer models keep arriving.
So the software follows each returned item through four steps. First, the return is booked, and a rider collects the item from the customer. This step is run by order tracking and returns software. Second, at a returns centre, an employee checks the item against a checklist on a screen and photographs it, and the software gives it a grade. Third, the software chooses the item's next use from its grade, its model and current prices. Fourth, it sends the item there.
For instance, imagine a returns centre near Hyderabad that receives 3,000 returned items a day for an electronics brand. One of them is a washing machine that a customer returned because it was noisy. The checklist shows a loose drum bolt, a small scratch on the side and an undamaged box. The software grades it B: it will work after a small repair, and it has a mark on its body. It then compares the choices. The machine can no longer be sold as new. Repaired and sold as an open-box item, it would fetch ₹18,500. Sold for parts, it would fetch ₹4,000. So the software sends it to the repair bench. A technician tightens the bolt in 20 minutes and tests the machine. It is then listed on a recommerce website as open-box, grade B, with a six-month warranty.
Items in grade A, which are as good as new, go back into stock in the warehouse management system (WMS) and are sold as new. Items that cannot be repaired are sold for parts or sent for recycling.
Reverse logistics is the last step of last-mile delivery. It matters more as online shopping grows, because a seller that recovers more value from each return can afford to offer easier returns.