Reverse Logistics Market Size, Share & Trends Analysis Report By Return Type (Recall Returns, Repairable Returns), By Service (Transportation, Warehousing), By End-user Industry, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global reverse logistics market size was estimated at USD 731.30 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 9.4% from 2023 to 2030. The global expansion of e-commerce businesses and the increasing frequency of returns and replacements of products have propelled the demand for reverse logistics services. Increasing product recalls due to strict government rules and product quality standards is expected to boost market growth. A competent reverse logistics solution has become essential owing to the expansion of e-commerce businesses worldwide. The demand for returning goods in a simpler way is increasing as the e-commerce industry/business is significantly expanding.

The e-commerce service providers emphasize reverse logistics as certain customers prefer to initially analyze the ordered products physically and then decide whether to keep them. If the product is not worth buying, customers can return it with the help of reverse logistics. For instance, buyers can only test clothing after making a purchase decision, especially for online shopping.

The frequency of returns and replacement items, necessitating a reverse logistics service, has propelled owing to the expansion of e-commerce businesses worldwide. Returns are more prevalent when customers shop online, as adding products into a virtual shopping cart is simple, but the appearance or fit of the product can be only verified physically. According to National Retail Federation, in 2021 online sales were approximately 23% of the total USD 4.583 trillion retail sales in the U.S. In addition, unwanted purchases and return to retailers' storefronts and warehouses are causing businesses a headache, bearing the loss.

The increasing use of advanced technologies such as Automation, Robotics, and Augmented Reality (A.R.A.R.) has enabled e-commerce companies to excel in efficiency and reachability. An increasing number of consumers prefer online purchasing over in-store purchasing owing to benefits such as convenience, lead time, cost, and variety of choices. E-commerce businesses significantly depend on shipping and warehousing capabilities to transfer products from retailers or manufacturing units to end-users in a shorter lead time.

Automation can route customer return requests, create packaging and labeling materials, reduce wait times for returning items to physical stores, and offer customers the option to return orders by mail, among others. Companies can use robotic process automation to contact consumers once the return request is initiated or to complete the return process and audit all operations efficiently. Automation can provide transparency in the return process to ensure that customers remain updated on the process once they raise a request for a return, exchange, or submit a warranty claim. Moreover, it helps in preventing fraud in the returns process.

COVID-19 Impact

The outbreak of the COVID-19 pandemic negatively affected supply chain operations globally. The pandemic resulted in an unprecedented strain on logistics and transportation services. Shipment companies encountered uncertainty in the movement of goods owing to the lockdowns imposed in countries such as the U.S., India, and the UK. The logistics networks were eventually disrupted due to a supply-demand imbalance and a reduced delivery capacity. The logistics activities in many nations were further hampered by a limited workforce and reduced operational hours.

However, the COVID-19 pandemic had a positive impact on the growth of e-commerce platforms. With physical stores closed, e-commerce sales increased during lockdowns. For instance, according to Digital Commerce 360, the pandemic resulted in e-commerce sales of USD 219 billion in the U.S. in 2020-2021. The increase in online sales led to an increase in product returns by consumers worldwide. Furthermore, the pandemic caused delays in returns and refunds due to the limited movement of goods and restrictions imposed by the state and international governments. In addition, return policies were increasingly being used by businesses to differentiate themselves from their competitors.

The high retail cost has paved the way for new trends such as “Buy Now, Pay Later.” Retailers have also begun advertising “Try Before You Buy” to increase sales and brand loyalty. Intelligent reverse logistics systems have become essential for businesses and their customers. The pandemic has compelled delivery companies to balance efficiency, safety, and customer satisfaction. Consumers are anticipated to prefer online purchases more than physical outlets, even after the pandemic owing to safety and security concerns. Therefore, retailers and manufacturers must prioritize reverse logistics to optimize the return process.

A high number of recalls of vaccines were recorded during the COVID-19 pandemic. For instance, 1.63 million Moderna vaccines were recalled in Japan by Takeda, a pharma company based out in Japan, due to contamination. Furthermore, adopting artificial intelligence in the reverse logistics process, helps providers automate the recall and return process, thereby generating savings in the whole supply chain process. Predictive analytics tools such as machine learning are adopted in multiple stages for managing the supply chain. Based on historical return data, these tools help assess the patterns for reverse logistics requirements, thereby managing the resources cost-effectively.

Return Type Insights

Based on return type, the market is classified into recall returns, B2B returns and commercial returns, repairable returns, end-of-use returns, and end-of-life returns. The B2B and commercial returns segment dominated the market with the largest revenue share of 34.59% in 2022 and it is witnessing a CAGR of 10.2% for the forecast period from 2023 to 2030. B2B returns refer to the product the retailer sends to the manufacturer. Generally, the merchandise is returned in bulk if defective or damaged. Businesses can sell returned goods if they are not defective and repairable. These goods can be put back into the market in secondary marketplaces such as outlet stores, overstock shops and websites, dollar stores, and auctions.

B2B returns and commercial returns have experienced significant growth within the realm of reverse logistics. This growth can be attributed to various factors that have influenced the dynamics of the industry. One of the primary drivers behind the rise in B2B returns is the increasing emphasis on sustainability and environmental responsibility. As companies become more aware of their environmental impact, they actively seek ways to reduce waste and adopt sustainable practices. This has led to a greater focus on managing returned products efficiently and responsibly. B2B returns, which involve products being returned from one business to another, have become a critical aspect of reverse logistics as companies strive to minimize their carbon footprint.

The repairable returns segment is anticipated to observe significant growth at a CAGR of 9.7% throughout the forecast period. Repair and return refer to fixing defective merchandise and shipping it back to the buyer. Some clients only desire the repair and return of a damaged item rather than a replacement. If a client does not want the item returned after the repairs are performed, the item can be brought back into circulation, in such cases, the total price of returns is decreased.

Some businesses establish a field repair operations center where items can be promptly examined, fixed, and dispatched to the market. The item might be marketed as "like-new" or "reconditioned" if the problem was small. Products with defects can be fixed and priced accordingly. The rising awareness and emphasis on sustainability have played a significant role in driving the growth of repairable returns. As companies and consumers become more environmentally conscious, minimizing waste and extending the lifecycle of products is greatly desired. Repairable Returns offer a viable solution by allowing returned items to be fixed and put back into circulation, reducing the need for new product manufacturing.

Service Insights

In terms of service, the market is classified into warehousing, transportation, replacement management, reselling, refund management, and others. Among these, the transportation segment dominated in 2022, gaining a revenue share of 45.76%. It is anticipated to witness a CAGR of 9.8% during the forecast period. An efficient transportation system is critical to reducing lead time and freight costs for recycled and used goods. The transportation system is the most important component of any logistics supply chain. It constitutes a significant portion of the logistical expense and plays a major role throughout the entire process.

A reliable transportation network offers improved logistics performance, reduced overall operating costs, and fosters better customer service, which is crucial for dealing with product returns. In reverse logistics, transportation refers to transporting and distributing returned or replaced merchandise. The increase in e-commerce and online shopping has led to a surge in the volume of returned products. Therefore, businesses require reliable transportation services to facilitate the movement of these goods from the customer back to the seller or manufacturer. The transportation service segment is crucial in ensuring that returned products are efficiently collected, sorted, and transported to the appropriate locations for further processing.

The warehousing segment is anticipated to observe significant growth at a CAGR of 9.6% throughout the forecast period. Warehousing in reverse logistics refers to storing returns, replacements, end-of-use or end-of-life products, and unsold merchandise. Although warehouses are already essential to reverse logistics, their demand has been growing rapidly with the expansion of the circular economy. In addition to the relatively straightforward processing and return of the stocks of undesired online order items, warehouses must perform a wider range of value-added operations.

To fulfill their commitments to reverse logistics, enterprises must properly plan, outfit, and staff their facilities. The increase in product returns, particularly in the e-commerce sector, has necessitated the growth of warehousing services in reverse logistics. With the rise of online shopping, customers can return products they are dissatisfied with or that are damaged or faulty. This surge in returns requires efficient warehousing solutions to accommodate the influx of returned goods. Warehouses play a critical role in providing temporary storage and managing the inventory of these products until they are processed, repaired, or disposed of.

End-user Industry Insights

In terms of the end-user industry, the market is classified into retail & e-commerce, automotive, consumer electronics, healthcare, and others. The retail & e-commerce segment dominated the overall market in 2022 attaining a revenue share of 49.91%. It is anticipated to witness a CAGR of 10.2% during the forecast period. The retail and e-commerce end-user industry segment has experienced significant growth within reverse logistics. This segment specifically focuses on managing product returns within the retail and e-commerce sectors.

Several factors have contributed to the expansion of this segment. E-commerce has transformed the retail landscape and significantly impacted reverse logistics. With the increasing popularity of online shopping, customers have the convenience of purchasing products remotely. However, this has also led to a higher volume of product returns. As a result, retailers and e-commerce companies require robust reverse logistics processes to handle the influx of returned items effectively. This has led to the growth of dedicated reverse logistics operations in retail and e-commerce.

The automotive segment is anticipated to observe significant growth at a CAGR of 9.9% throughout the forecast period. Many stakeholders are impacted by automotive recalls, including car owners, automakers, component manufacturers, franchised dealers, insurers, and government authorities. However, reverse logistics is essential in the automobile sector for several reasons, including legal policies surrounding ecological and environmental issues.

In addition, the vehicle manufacturer is responsible for maintaining the product after its useful life has expired due to the composition of ecologically sensitive components in automobiles. Some factors responsible for automotive recalls include emission recalls, electric vehicle battery defects, and electronic component defects. The significance of reverse logistics in the automotive sector increases due to all these factors and the growing awareness of consumers regarding the environment. The automotive segment is further segmented into spare parts, lubricants, and vehicle accessories.

Regional Insights

Asia Pacific led the overall market in 2022, with a revenue share of 52.68%. The region is anticipated to retain its dominance over the forecast period owing to the growing popularity of fashionable apparel among the young population. The growth is also driven by the high proliferation of the e-commerce industry and the rapid growth of e-commerce activities in countries such as India and China. The growing use of e-commerce results in increasing returns, which is expected to contribute to regional market growth. Moreover, the increasing growth of manufacturing industries in developing countries and the rising demand for reverse logistics for electric vehicles are expected to fuel market expansion.

Middle East and Africa are anticipated to observe a significant CAGR of 9.9% throughout the forecast period. The reverse logistics industry in the Middle East & Africa is anticipated to grow at the second-fastest CAGR over the forecast period. Key players are adopting various strategic initiatives to gain a competitive advantage. For instance, in November 2022, Cartlow raised USD 18 billion to optimize its technology in reverse logistics and boost its operations in Saudi Arabia and UAE. Moreover, increasing investments are being made in the Middle East to establish the region as a hub for logistics. The abovementioned factors, coupled with a rise in disposable income, offer favorable opportunities for the growth of the reverse logistics industry in the region.

Key Companies & Market Share Insights

The market is fragmented and is anticipated to witness competition due to the presence of several players. Major service providers are continuously upgrading their technologies to remain ahead of the competition while ensuring integrity, efficiency, and safety. The prominent players focus on partnerships, product upgrades, and collaborations to gain a competitive edge over their peers and capture a significant market share. In December 2023, FedEx Corporation unveiled the upcoming launch of FedEx Consolidated Returns in the U.S. This innovative solution provides merchants with a low-priced and hassle-free e-commerce returns option, which they can pass on to their customers. Set to be introduced in December 2023, this expanded service aims to enhance the overall returns experience for online shoppers. Some prominent players in the global reverse logistics market include:

• DB SCHENKER (Deutsche Bahn AG)

• Deutsche Post AG

• FedEx Corporation

• Kintetsu World Express, Inc.

• United Parcel Service, Inc.

• Yusen Logistics Co., Ltd.

• RLG Systems AG

• Core Logistic Private Limited

• Safexpress Pvt. Ltd.

Reverse Logistics Market Report Scope

Global Reverse Logistics Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the industry trends in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global reverse logistics market report based on return type, service, end-user industry, and region:

• Return Type Outlook (Revenue, USD Billion, 2017 - 2030)

  • Recall Returns

  • B2B Returns and Commercial Returns

  • Repairable Returns

  • End of Use Returns

  • End of Life Returns

• Service Outlook (Revenue, USD Billion, 2017 - 2030)

  • Transportation

  • Warehousing

  • Reselling

  • Replacement Management

  • Refund Management

  • Others

• End-user Industry Outlook (Revenue, USD Billion, 2017 - 2030)

  • Retail & E-commerce

    • Clothing

    • Electronic Devices

    • Footwear

    • Home Décor

    • Others

  • Automotive

    • Spare Parts

    • Lubricants

    • Vehicle Accessories

  • Consumer Electronics

    • Refrigerator

    • Television

    • Air-Conditioner

    • Grinder

    • Others

  • Healthcare

    • Medicine

    • Personal Care Products

  • Others

• Regional Outlook (Revenue, USD Billion, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • UK

    • France

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

    • Argentina

  • Middle East & Africa

    • GCC

    • South Africa