Reverse Commerce 2.0

Another important aspect to commerce and the consumer shopping demands is the customer returns, or reverse logistics, handling.  No discussion on commerce can be complete without inclusion of reverse logistics.  This was the critical aspect required for the consumer to first engage with eCommerce retailers.  The requirement is the ability of the consumer to return any purchase within a time period for any reason and be provided credit for the purchase.  

This provides additional complications for the retailer to handling the returned product in a manner that recovers the most cost as possible.  The requirements for product handling change dramatically for each product type and each of these requirements must be incorporated in the merchants process flow.  For example, apparel can be easily examined and reconditioned for resale, where electronics can be costly to examine and recondition and even then electronics must be sold at a discount as ‘open box’.  These are all obviously processes and procedures that can be clearly defined and implemented.

The challenge in this though is incorporating these processes and procedures in your collaborative supply chain network to support these requirements.  Handling customer returns is much easier when the retailer provides all services and sales support to the consumer.  However it becomes a little more difficult when you bring additional partners into the equation.  This support will most probably start with a single point of support from the retailer and then as the collaborative partnerships grow the opportunity to push the support of the processes and procedures may be appropriate to shift to one or more partners.  

There are two factors you must take into account with your collaborative supply chain:

1. The support of the consumer especially as it relates to satisfaction.
2. The cost of handling the returned product.

The most critical aspect of these factors is the satisfaction of the consumer.  The merchants and their collaborative supply chains are responsible for containing and recovering the cost of these returns.  The merchant must realize that they will never recover the full cost of the product, services and original shipping and delivery to the consumer.  

The reason why this is so important is because of the impact it has on the consumer retention and long term satisfaction of the consumer.  As I have been saying for a long time now the key to success is the long term satisfaction of the consumer which itself leads to the long term retention of the consumer.  Retailers understand this and have included these processes and procedures as a cost of doing business.  This cost view however sometimes colors the interaction with the consumer.  Retailers must be careful to train and provide electronic services that simplify and even encourage the return of unwanted products.  Too many times this view of a cost is projected to the consumer in their interaction through many questions and complicated procedures to return.

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumers’ experience?  Improving the consumers experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?