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E-tailers exploring ways to improve reverse logistics costs: Study

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E-tailers are increasingly looking for ways to improve their reverse capabilities to offset the high costs associated with handling returned goods, a study by said.

E-tailers exploring ways to improve reverse logistics costs: Study
E-tailers are increasingly looking for ways to improve their reverse logistics capabilities to offset the high costs associated with handling returned goods

Reverse logistics refers to the process of return of a product to the manufacturer or the company.

“The rising consumer demand for free and fast product delivery correlates with a surge in product returns. Fulfilment and returns go hand in hand; they represent the two halves of the supply chain. While fulfilment means bringing products to market, returns flow the product in reverse back through the supply chain,” the report said.

It added that while handling product returns is not a new challenge, it has become an infinitely bigger concern in an Omnichannel marketplace.

“It is also extraordinarily costly and is eating into already pressured profit margins,” it said, adding that shoppers return an estimated over US $600 billion worth of goods each year.

The report said merchants are increasingly exploring new models to offset the costs of returns.

About 58 percent of retail respondents said they add a surcharge for returns currently, while a segment of participants said they plan to do so in the future.

“Decision makers are testing solutions such as leveraging the store as a product returns hub. A resounding 71 percent of surveyed executives agree that more retailers will turn stores into fulfilment centres that accommodate product returns,” it said, adding that a number of retailers expect to engage third-party firms to manage the returns process in the future.

About 35 percent of the respondents of the study in the Asia-Pacific region were from India. Overall, the study is based on responses from about 2,700 participants.