The retail industry has experienced explosive growth in online sales in recent years, driven by the rising popularity and ease of online shopping. This popularity and the more developed online channel led to high expectations of the customer omnichannel experience. As a result, the need to provide individual experiences for everchanging customer expectations is enormous. The commerce market is expected to continue to grow in the coming years, driven by the rise of mobile shopping, the expansion of ecommerce into new markets, and the introduction of new technologies such as artificial intelligence and augmented reality. In June 2020 global retail ecommerce traffic faced a record 22 billion monthly visits, searching for daily demands such as groceries, clothing, and retail technology items. After a slight decline of sold, closed, or halted international trade in 2020, it is overall expected that the share of ecommerce sales to retail sales worldwide will increase to 24.5% by 2025 from 13.8% in 2019.
Ecommerce inventory management is a complex procedure involving huge product movements, tracking, resource, and planning. An inventory management system is the backbone of ecommerce business, even when if you have only fewer customers to serve. Poor ecommerce inventory management will only lead to dissatisfaction among customers but also cause huge challenges in ecommerce business management. As an online retailer, you might have exceptional products to sell, but what if you have high stock production and no customers to purchase it or low inventory with high market demand? In both cases, it is affecting the bottom line of your business.
Another major challenge is handling product returns in e-commerce through reverse logistics, primarily revolving around the complexity and cost of the process. Unlike the straightforward nature of forward logistics, reverse logistics must account for various unpredictable factors, such as the condition of returned products, the reasons for returns, and the need for specific handling procedures based on product categories. These variables can significantly increase costs related to transportation, labor, and processing, making the return process more resource-intensive. Additionally, the coordination required with multiple carriers and the need for robust tracking systems to monitor return shipments can introduce delays, potentially diminishing customer satisfaction.
Reverse logistics is when goods move from their destination back through the supply chain to the seller and potentially back to suppliers. The goal is to regain value from the product or dispose of it. Worldwide, returns are worth almost a trillion dollars annually and have become increasingly common with the growth of ecommerce. The objectives of reverse logistics are to recoup value and ensure repeat customers. Less than 10% of in-store purchases are returned, compared to at least 30% of items ordered online. Savvy companies use reverse logistics to build customer loyalty repeat business and minimize losses related to returns. In addition, there are 5 types of reverse logistics (5 Rs): returns, reselling, repairs, repackaging, and recycling. Retailers apply metrics to each of these options to track improvement and success.
Article by: Asst. Prof. Suwan Juntiwasarakij, Ph.D., Senior Editor & MEGA Tech