REVERSE SUPPLY CHAIN

SESSION 3

PRODUCT RETURNS
MANAGEMENT

8/05/20XX
Do you know?

- At least 30%products ordered online are

returned.

- Almost 92% of customers will buy something

again if returns are easy.

- 67% of consumers check the returns page

before making a purchase.

-Western Europe, online sales grew up from

£224.425 billion in 2019 to £294.192 billion by
the end of 2020, leading to an increment in
online returns activity.

-Return rates for online sales in the US are

typically between 20% to 40%, depending on the
category of merchandise.

8/05/20XX
 ‘Product return’ is an activity initiated by
consumers, which involves taking back the
previously purchased product to its original
source and successively receiving either a
refund within the original type of payment,
exchange for one more item, or store credit.

A reverse flow in the traditional supply

What is Reverse chain and are categorized as the
Product Returns activity of returning goods back through

Management ? the supply

retailers.
chain with a focus on
Key themes Timing, quality, quantity, and acquisition
price of cores
Key
in product
acquisition
Points
Financial incentives offered to consumers

Convenience

in PRM
Information on take-back policy and
take-back offers
Type of Product Returns

Manufacturing Distribution Customer

Returns Returns Returns

• Surplus raw materials • Commercial returns • End-of-Use/End-of-Life

• Rework/Damage • Distribution damage • Product failure
• Scraps • Product recalls • Poor quality
• Faulty products • Wrong delivery product • Wrong delivered
• Mis-specifications • Stock adjustments • Incomplete shipments
• By-products • End-of-shelf life • Damage under
• Contamination • Product performance warranties/guarantees
• Changed Market scenario • Fraud
• Better opportunity
PRODUCT EVALUATION STAGES (Bai and Sarkis, 2013).

C O N F E R E N C E P R E S E N TAT I O N 9
Publication (a) and citation (b) trend of the PRM studies (1986–2020).
Most contributing countries in the product return field (1986–2020)
Comp

uter

and

Electr

onic

Produ

ct

Manuf

acturi

ng

49

Appar

el

Manuf

acturi

ng

Industry Sectors Number of Papers

16

Retail

Trade

13

Food

Servic

Computers and Electronic product 49

es

Industry
8

Health

Care

and

Social

Apparel Manufacturing 16
Assist

ance

Retail trade 3

Analysis Food Service 8

Manufacturing 5
Keyword based Categories (Ambilkar et al., 2021)

C O N F E R E N C E P R E S E N TAT I O N 13
 1. Return Policy
Time
 Return policies are a consumer risk reliever Leniency
often used by retailers to increase consumer
demand
 Increase in demand leads to a higher rate of
Exchange Monetary
product returns. Leniency Leniency
 Return policies are a combination of time and Return
effort.’ Policy
Leniency
 Returns policy enhances customer post-
purchase satisfaction and provides services by
retailers with a set of limitations imposed on
consumers Effort Scope
 Limitations include the due date for returns, Leniency Leniency
return in the original packaging, original
proof of purchase (i.e., purchase receipt), and
no visible signs of use.
 1. Return Policy Time
Leniency

1. Time Leniency: Product return deadlines provided by Exchange Monetary

Leniency Leniency

the retailer/wholesaler (a 15-days, 30-days, 90-days) Return

Policy
Leniency

- $100 billion of the total value of returns falls under this policy
Effort Scope
2. Monetary Leniency: Leniency Leniency

i. Lenient (offering cashback)

ii. moderate (cashback for product purchased in sales not applicable,
only exchange is applicable)
iii. restrictive (offering an exchange for the product, but monetary
refund option is not available)
3. Effort leniency:
-Customer efforts are required (like requiring the original receipt, tags, or
packaging of product)
-Decathlon and Pepperfry accept instore returns of a product purchased
through their online channel.
 1. Return Policy
4. Scope Leniency:
- Store limits the return of the items based on the return- worthiness
- (e.g., products bought on sale may not get returned).

5. Exchange Leniency:

-Some retailers offer product replacement, sales offers, store credit,

or a gift voucher/coupon for the returned item instead of the
complete refund as given in the time leniency pol icy
- Customer can replace the defective product or get different items of equal
value by using this return policy
 2. Forecasting product return

- Uncertainty is more in terms of cost, quality,

quantity, and time of the returned product, the
planning for reverse logistic.
- Forecasting for product returns is needed for
the collection, transportation,
remanufacturing/recycling/refurbishing, and/or
disposal of the products to attain the desired
competence.
- Accurately forecasted product returns enhance
the strategic, tactical, and operational processes
to manage RL activities and achieve the
optimal operational performance level.
 3. Product Recovery

- Recovery of used products is increasingly essential in 101

reverse supply chain management to promote a ‘supply
chain resilience and sustainable resource utilization.

- Product recovery practices include used or defective

product collection, inspection, separation,
disassembling and reassembling, reconditioning,
24 25
repairing, reuse, remanufacturing, refurbishing,
recycling, and incineration processes of the products. 6

Remanufacturing
- Return-to-stock, return-to-vendor, reclamation of parts, Reuse Recycle Refurbishing

salvage/ scrap, recycle/repair/refurbish/remanufacture,

and incineration
 4. Customer Behavior
 Customer choice, customer memory, and attitude stability to predict the process that customers go
through at a pre-decisional stage which may affect their post purchase behavior
 Four types of online shoppers with different shopping
behaviors (Rohm and Swaminathan,2004)
1. convenience shoppers,
2. variety seekers,
3. balanced buyers
4. store-oriented shoppers.
 Customer satisfaction is the key factor in managing the
returns successfully.
 Three things, viz. website, delivery of the product, and
how returns problems are addressed by prepared retailers,
which demonstrates the customers’ perception concerning quality and delivery.
 5. Product Uncertainty

 Online markets pose difficulty for appraising products

and experiencing goods.
 Product quality information and preference should be
provided by the firm to resolve consumer uncertainty.
The uncertainty in the returned quantity of products
led to uncertain quality levels.
 Consumer demand is extremely dynamic and
unstable, particularly in the fashion industry.
 Some insurance companies have developed ‘return-
freight insurance’ to compensate customers’ loss of
return-freight fees for resolving product return
disputes within online purchasing.
 Greater the uncertainty in the customer reviews,
higher probability of providing the return-freight
insurance to the product.
 6. Technology

 In the past decade, the emergence and

advancement of the technology in electronic data
management have promoted economic growth,
whereas continuous innovation and altering market
forces transformed the electronics industry into the
most competitive business globally.
 Global consumption is growing, and product
retirement is faster due to rapid technological
advancement. Technology helps in increasing the
efficiency of returns process.
 Startups like software developed by Optoro sorts
analyzes unwanted products to route them through
the online market and other channels utilising
various algorithms to determine the retailers’ profit.
 6. Technology
 Direct product examination information can be delivered
using a Virtual try-on technology.
 RETURNLOGIC© is one of the software that aims to
develop analytical solutions for e-retailers/retailers in
understanding ‘product return rates, reducing the number
of returns, and creating customer value.’
 Blockchain, with the integration of technologies like
Internet-of-Things (IoT), 3D printing, and artificial
intelligence helps develop permanent, legal record
related to each moment of product through the supply
chain.
 GPS-tracked product return can locate the real-time
position and generate a signal in the blockchain for
immediate refunds.
 Internet of Things (IoT) aids in detecting, storing, tracing,
and assessing the product life-cycle data, that mitigate or
eliminate uncertainties during the product recovery.