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  • MAP Asia Pacific Ltd

Brands deal with necessary pain of reverse logistics as Indians return 30% of e-commerce purchases

Online shopping has made life easier for most of us. The best part is that if you don’t like the product, just click a button and initiate an exchange or return and refund. But this is where the nightmare starts for e-commerce players.

In logistics terminology, moving sold products back to the seller through the supply chain is known as reverse logistics. The process is a drain on resources for all sellers — B2B and B2C — because it is an added operational expenditure (opex) burden. Besides, it does not yield an instant financial reward despite the toil required to get the goods back. Industry players also say collection agents, who are often underpaid, are not always keen on going to a customer's home to pick up the return because the experience can be unpleasant. Therefore, there is little motivation for executing a reverse logistics cycle.

“Reverse logistics is painful. There is no upfront monetary benefit,” says Nikunj Saxena, a Delhi-based shoe retailer who sells online too.

Industry estimates say 30% of products sold via e-commerce platforms are returned for one reason or the other. The average manufacturer spends between 5 and 20% of revenues on returns, says a study by LogiNext. Prashant Gupta, Principal at management consulting firm Kearney, puts the customer returns figure between 10% and 50%, based on the product category, platform and customer destination. Segments such as apparel, fashion items, tech, readymade garments, women’s and men’s wear and footwear have a higher requirement of reverse logistics.

Necessary for business

Despite the woes, product return is not a feature online sellers can do away with anymore. People would not buy as many goods as they do now if e-commerce platforms do not offer returns. It is already a way of life in e-commerce. “If the returns process is not taken seriously, it could soon result in a seller having more and more disgruntled customers. This will hit the goodwill of the company,” says Saxena.



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