Logistics firms turn to smart routing, AI to fast-track festive returns

As online orders and returns surge during the festive season, logistics firms like Shiprocket, Prozo, and Zippee are turning to smarter routing, automation, and network optimisation

As online shopping surged during the festival season this year, reverse logistics grew just as fast.

 

For players like Shiprocket, Prozo and Zippee, return volume surged upto 25 per cent.

 

While anticipating a rise in returns, these third-party logistics companies turned to smarter pre-sorting and routing, along with tighter network optimisation, to ensure a fast and smooth reverse logistics process.

 

Reverse logistics refers to the process of returning products from end users back through the supply chain. These include refused, undelivered shipments, returns, or exchanges.

 

Logistics and supply chain platform Shiprocket, backed by Zomato and Temasek, said it focused on enhancing visibility, automation, and network optimisation to accelerate returns and exchanges.

 

For the company, while the total orders processed grew by around 30 per cent year-on-year (Y-o-Y), reverse logistics volumes were up by nearly 25 per cent.

 

“Shiprocket’s returns feature enables automated reverse logistics with instant pickup generation, smart routing, and integration with multiple courier partners to ensure faster turnarounds. The biggest time and cost savings came from automating the return to origin (RTO) and exchange workflows. It was through predictive analytics, helping us preempt failed deliveries, reduce manual intervention, and cut the overall return cycle time while optimising freight costs,” Atul Mehta, chief executive officer (CEO) of domestic shipping at Shiprocket, said.

 

Zippee, another logistics firm that powers quick commerce (qcom) logistics for consumer brands, said the company built dense micro-hubs, smarter routing, and flexible driver pools to handle festival surges.

 

Madhav Kasturia, founder and CEO of the platform, said, “We have introduced a three-layer returns stack, our try & buy flow, pre-emptive quality control (QC) tagging at delivery, micro-hub-based consolidation, and live exchange triggers via partner application programming interface (API). The biggest impact has come from smart pre-sorting at the point of pickup. Drivers now verify return categories (resalable, refurbishable, or discard) on the spot through the Zippee app.”

 

The platform saw a 3.8 times order volume rise compared to last year, and overall returns hovered around 5 per cent.

 

Both platforms said they introduced intelligent warehouse mapping, allowing returns to be directed to the nearest processing centre or local hub for quicker inspection and restocking, instead of long-haul lanes.

 

Warehouse and fulfilment solutions platform Prozo noted the company processed returns on a 'first-received, first-closed' basis, preventing the build-up of pending volumes.

 

“Despite a 20-25 per cent surge in order volumes and elevated reverse flow, Prozo sustained over 95 per cent service level agreement (SLA) adherence across returns and exchanges. This consistency was achieved through proactive manpower planning, advanced visibility from brand-side return projections, and real-time throughput tracking. All this ensured that returned inventory was quickly reconciled and made live again for the next sale cycle,” said Ashvini Jakhar, founder and CEO of the platform.

 

Even as logistics firms tried to optimise reverse logistics, Zippee and Prozo noted a 5-8 per cent Y-o-Y increase in cost while facilitating returns.

 

“Our reverse fulfilment costs increased by around 5 per cent, which is in line with festival demand spikes. The key is that volume grew almost 4 times, but cost didn't scale proportionally; that's operational leverage at play,” Kasturia said.

 

Jakhar, too, added that unit costs across fulfilment and reverse logistics rose by 5-8 per cent. It was driven by fuel and transportation inflation, surge-season manpower, and additional packaging and safety measures.

 

Among categories that witnessed the most returns, fashion and apparel came on top, followed by electronics.

 

“The fashion and lifestyle segment continued to see the highest rate of returns this festival season, followed by electronics accessories and beauty products. The key reasons included size/fit issues, multiple consumer ordering behaviours (to compare options), and shorter return windows by marketplaces,” Mehta said. Zippee highlighted the same trend.

 

Prozo also mentioned that apparel and footwear continued to see the highest return rates during the festive period, largely due to fit, size, and colour mismatches common in trial-based and gifting purchases.