One industry that has been growing unstoppably even in difficult times is the e-commerce industry. It might take a few clicks from the customer’s end, but is it the same for the seller?
No, it is not. Have you ever wondered how does this procedure work? Yes, you place the order; it gets delivered to you by the shipping partner or the company itself. But then again, do many companies carry this out on their capability or outsource some entity?
It mainly depends on the situation of the company. The better way is to hire a third-party logistics or 3pl’s; this significant process needs to handle by experts.
A fulfilment centre focuses on every minute detail while receiving, processing, packaging, and picking up the order. The inventories at the centres are organised so that the order processing time gets lessened to a minimum. A fulfilment centre is made available on rent by a 3PL company, and generally the commercials are fixed with a fee per order i.e. movement of the goods. Here the customer’s orders are completed and processed for the e-commerce retailers.
Owning and managing the roles of the fulfilment centre is not as easy as it seems. It requires a dedicated team of experts who are well-versed with the ins and outs of the industry. Moreover, every business is different from the other, and so its requirement. A very few and only specialised 3PL’s offer these services, as these are not only capital intensive but also requires understanding of the right acumen. Fulfilment centre covers various aspects and can be proved helpful. Let us understand how one can benefit from it:
This all is part of the forward supply chain, i.e., from manufacturer to customer but, there is a backward movement in the supply chain too.
To understand the other part, let’s take an example; you were browsing online and came across famous terracotta items of Kolkata. You decided to buy it; you ordered and received the parcel, later on realising that it is not up to the mark. You decided to return it.
After your return gets picked up, it’ll not directly go back to the seller/manufacturer it will precede to a fulfilment centre in West Bengal, more specifically the designated fulfilment centre in Kolkata. From there, the disposal, reselling or recycling of the product will take place. This whole procedure comes under reverse logistics.
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Reverse logistics gates the backward movement in the supply chain, i.e., the product moves back from the end-user to the producer or seller. It could happen for several reasons, such as regaining value from an asset or disposing of, putting in service, or recycling a product. The products may be are resold, compensated, or disposed of permanently.
The department also ensures to reduce returns by creating support websites or local centres, handling delivery failures and packaging when needed and moving unsold merchandise back to the manufacturer depending on the contract.
But how do the centres determine what to repair, what to dispose and what to resale? There are three reasons a product moves backwards in the supply chain.
Reverse logistics includes the monitoring of the life-cycle of the product/asset. It comprises a step by step procedure that is followed by the 3pl’s while performing the task.
Return to origin – It is a fundamental metric in e-commerce. In this scenario, merchandise never makes it to the final destination. It can happen due to the – customer not receiving/accepting the package or the contact details were incorrect. There are RTO related costs that need to be put light on.
1. The to and fro movement of the product leads to shipping charges that are to be forwarded and returned.
2. For every backward movement of the product, the cost of repackaging gets included.
3. There is always a possibility of product damage during its shipment.
4. The expense in the handling of recalled inventory.
5. In few situations, the commodity gets caught in transit, thereby losing importance and becoming useless at moments.
6. The disposal cost for various returned items tends to be a little extra.
7. Loss of probability.
8. Cost of client turnover or customer turnover (when an organisation customer base gets reduced during a set period).
According to CNBC TV18, back in 2019, Kolkata recorded the highest return-to-origin rate leading to more demand for fulfilment centres in Kolkata.
It concludes that both fulfilment centre and reverse logistics are crucial parts of the supply chain that might seem expensive at first, but when joined hands with the right firm like StoreFresh, you will observe your company benefits in the long run.
You can contact us by visiting our website www.thestorefresh.com or emailing us at firstname.lastname@example.org . We give our attention to customers as well as we care about the environment. Our services are not just limited to customer satisfaction but also contribute to the environmentally sustainable activity.
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