Reverse logistics costs come from a variety of activities such as merchandise credits to the customers, transportation costs of moving the items from the retail stores to the central returns distribution center, repackaging of the serviceable items for resale, the cost of warehousing the items awaiting disposition and the cost of disposing of items that are unserviceable, damaged, or obsolete.
Besides those tangible costs, there are “intangibles” that greatly impact the customer such as increased customer wait times, loss of confidence in the supply system, and the placement of multiple orders for the same items.
The value of the returned item is determined by trained employees to see if it should be repaired or refurbished and which are allowable versus non-allowable returns for example.
The last part of this step is the marketing of products that have been repackaged, repaired, refurbished or remanufactured, which are usually shipped to secondary markets.
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