𝗥𝗲𝘃𝗲𝗿𝘀𝗲 𝗟𝗼𝗴𝗶𝘀𝘁𝗶𝗰𝘀: 𝗧𝗵𝗲 𝗡𝗲𝘅𝘁 𝗙𝗿𝗼𝗻𝘁𝗶𝗲𝗿 𝗢𝗳 𝗧𝗵𝗲 𝗟𝗮𝘀𝘁-𝗠𝗶𝗹𝗲 𝗥𝗮𝗰𝗲 | 𝗦𝘂𝗰𝗰𝗲𝘀𝘀𝗳𝘂𝗹 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗲𝘀 𝗜𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁𝗲𝗱 𝗯𝘆 𝗧𝗼𝗽 𝗟𝗼𝗴𝗶𝘀𝘁𝗶𝗰𝘀 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀: 𝗙𝗲𝗱𝗘𝘅, 𝗨𝗻𝗶𝘁𝗲𝗱 𝗣𝗮𝗿𝗰𝗲𝗹 𝗦𝗲𝗿𝘃𝗶𝗰𝗲

Reverse Logistics Market by Return Type (Recalls, Commercial & B2B returns, Repairable returns, End of use returns and End of life returns), End User (E-commerce, Automotive, Pharmaceutical, Consumer Electronic, Retail, Luxury Goods, and Reusable Packaging), and Service (Transportation, Warehousing, Reselling, Replacement Management, Refund Management Authorization, and Others): Global Opportunity Analysis and Industry Forecast, 2021–2028

It’s no secret that industrial real estate has fared much better than other asset classes as the pandemic continues to fuel tremendous growth in the e-commerce arena. New data from Digital Commerce 360 reveals that consumers spent $861 billion online with U.S. retailers in 2020, up 44% from 2019. Amazon hit almost 40% year-over-year growth, while online sales, in general, jumped 45% year-over-year for the holiday season. The rise in online orders has forced companies to reevaluate their supply chain operations and develop production enhancements to keep pace with the rise in demand. 

While the accelerated e-commerce activity has been a boon for many businesses, the uptick has also sparked a substantial increase in e-commerce returns. A growing number of returns are inevitable given the larger pool of consumers, but they can strain profit margins and negatively impact an organization’s bottom line if not properly managed. $1 million in returns can potentially erode $500,000 in profits, prompting many major retailers to simply allow shoppers to keep merchandise rather than process a costly return. 

Reverse logistics is for all operations related to the reuse of products and materials. It is "the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics." Growing green concerns and advancement of green supply chain management concepts and practices make it all the more relevant. The number of publications on the topic of reverse logistics have increased significantly over the past two decades. The first use of the term "reverse logistics" in a publication was by James R. Stock in a White Paper titled "Reverse Logistics," published by the Council of Logistics Management in 1992. The concept was further refined in subsequent publications by Stock (1998) in another Council of Logistics Management book, titled Development and Implementation of Reverse Logistics Programs,[4] and by Rogers and Tibben-Lembke (1999) in a book published by the Reverse Logistics Association titled Going Backwards: Reverse Logistics Trends and Practices. The reverse logistics process includes the management and the sale of surplus as well as returned equipment and machines from the hardware leasing business. Normally, logistics deal with events that bring the product towards the customer. In the case of reverse logistics, the resource goes at least one step back in the supply chain. For instance, goods move from the customer to the distributor or to the manufacturer.

Key players operating in the global reverse logistics market include C.H. Robinson Worldwide, Inc., CCR Logistics Systems AG, Core Logistic Private Limited, DB Schenker, Deutsche Post DHL Group, FedEx Corporation, Kintetsu World Express, Inc., Safexpress Pvt. Ltd., United Parcel Service, Inc., and Yusen Logistics Co., Ltd.

Reverse logistics market by return type, the commercial return segment dominated the global reverse logistics market in 2020, in terms of revenue, and is expected to lead the market throughout the forecast period. By end user, the e-commerce segment is anticipated to show a lucrative growth over the forecast timeframe. By service, the replacement management segment is anticipated to offer a lucrative growth during the forecast timeframe. At present, Asia Pacific is the highest revenue contributor, followed by North America.

According to a recent report published by Allied Market Research, titled, “Reverse Logistics Market by Return Type, End-User, and Service: Global Opportunity Analysis and Industry Forecast, 2021–2028,” The global reverse logistics market was valued at $635.6 Billion in 2020, and is projected to reach $958.3 Billion by 2028, registering a CAGR of 5.6% from 2021 to 2028.

In terms of revenue, Asia-Pacific leads the market, followed by North America, Europe, and LAMEA. Due to the booming e-commerce industry in emerging economies, infrastructural development, and increased adoption of outsourced logistics services in the region, China dominated the global reverse logistics market share in 2020 and is expected to grow at a significant rate during the forecast period. In emerging and industrialized economies, reverse logistics services are increasingly being used to expedite the movement of returned and damaged items back to the producer. Reverse logistics services are used by the manufacturers to recapture value after a product has been sold or at the end of its lifecycle.

By return type, the reverse logistics market is categorized into the recalls, commercial returns and B2B returns, repairable returns, end of use returns, and end of life returns. The commercial returns segment accounted for the highest revenue in 2020, owing to the increase in adoption of reverse logistics by various manufacturers.  The rise in demand for efficient reverse logistics services in the remote areas further increases the demand for commercial return reverse logistics segment around the world. Evolution of reverse logistics solutions such as IoT based reverse logistics services, automation of reverse logistics, and other technologies improves the agility of reverse logistics services. The rising global e-commerce market stimulates the growth of commercial returns necessitating the need for an effective reverse logistics services. 

Based on end user, the reverse logistics market is segregated into e-commerce, automotive, pharmaceutical, consumer electronic, retail, luxury goods, and reusable packaging. In 2020, the e-commerce segment dominated the end-user segment, owing to rising consumer spending in developing and developed nations, as well as increased investment in transportation infrastructure around the world.

The expansion of e-commerce industry, increased product recall due to stringent government rules for product quality in the automotive industry, and rise of tech-driven reverse logistics services and growing adoption of IoT-enabled connected devices, are expected to drive the global reverse logistics market growth over the forecast period. However, lack of control of manufacturers on reverse logistics service and uncertainty in the reverse logistics process is anticipated to hamper the growth of the market during the forecast period. Moreover, introduction of Blockchain technology and reduction in losses owing to adoption of a multi-modal system is expected to offer lucrative opportunities for the market in the future.

COVID-19 Impact Analysis 

The COVID impact on the reverse logistics market is unpredictable and it is expected to remain in force till the second quarter of 2021. 

The COVID-19 outbreak forced governments across the globe to implement strict lockdowns and made social distancing mandatory to contain the spread of the virus. This led to a sudden downfall in global trade which further reduced the demand for reverse logistics across the world. 

Moreover, the nationwide lockdown forced the reverse logistics service providers to partially or completely shut their operations which resulted in delays in the return and replacement activities.

The rise in pharmaceutical and e-commerce sales owing to the pandemic has increased the demand for the reverse logistics market.

Key Findings Of The Study

By return type, the end of life returns segment is expected to register a significant growth during the forecast period.

By end user, the e-commerce segment is anticipated to exhibit significant growth in the near future.

By service, the replacement management segment is expected to offer significant growth during the forecast timeframe.

By region, Asia-Pacific is anticipated to register the highest CAGR during the forecast period.