EFY Times  
Tuesday, October 21, 2014

 
GO
 
 

Reverse Logistics Reduces Return Costs By 25 Per Cent
 
Home >> Infotech >> Interviews
 
Reverse Logistics Reduces Return Costs By 25 Per Cent  
 
Consumer electronics companies in India do not manage the reverse supply chain well even when return rate of defective products is around 5 per cent.    
Rate this news:  (0 Votes)
Tuesday, July 24, 2012 The Reverse Logistics Company Pvt. Ltd recently joined hands with Philips India to handle its reverse supply chain. The company has been providing reverse logistics services to consumer electronics companies for the past two years now and provides services to the likes of LG, Samsung, Toshiba, Haie, Acer, Black & Decker, among many more. It has also set up a special channel to sell the returned goods, which are first repaired and refurbished and then sold under its brand GreenDust. EFYTimes spoke to Hitendra Chaturvedi, founder & CEO, Reverse Logistics Company, to find out more about the importance and current state of reverse logistics in the CE industry.

Hitendra Chaturvedi, reverse logitics, supply chain, RLC, Reverse Logistics Company, consumer electronics, GreenDust, greendust.com, repair, refurbished goods, scrap dealers, retailers,




Why is reverse logistics important in the consumer electronics industry?

HC At times, the products that are bought by consumers suffer transportation damage or come with a factory defect or some accessories are missing or also in some cases, the consumer might not like it. That is when the products have to traverse the return journey wherein reverse logistics is important.

To give an idea about the volumes, in the USA and western countries, the return rate of defective products is about 10 per cent, while in India, it is about five per cent overall. Even in consumer electronics, it is just about the same. So when these five items out of the 100 items need to be sent back, the volumes are not sufficient for most companies to justify putting up a very robust process to manage these returns.

These companies then look out for companies like ours that specialise in managing returns. We make a business model out of aggregating returns from multiple companies and manage the entire reverse cycle which includes call centre, picking up return material from customer or a retailer or from a warehouse, bringing products to a place for repairs and refurbishing. And once they are repaired and refurbished, we then use a channel of disposition.

With RLC, we have two channels of disposition – one is online through GreenDust.com and the second is over 50 GreenDust stores that are run by franchisees, which sell GreenDust certified products.

When the defective products are to be sent back, we get a call and we arrange for a pick-up and send it to the nearest centre where it is quickly repaired. After repairs, we have an inspection check in place after which we certify it as a refurbished product and it moves to either the online or the offline store. The products are then sold to the customers stating very clearly that they are refurbished products. We even give one-year's warranty on the products and even provide after-sales services also just like in the case of a brand new product.

You carry out reverse logistics only for the consumer electronics industry or other industries as well?

HC We carry out our services across multiple product categories. We started with four lines – consumer electronics, home appliances, IT and mobile. But we have customers in the e-commerce space too like homeshop18, futurebazaar, to name a few. Owing to this, we get all sorts of products like pen drives, plastic containers, even clothing. So, even though our focus is on the four categories that I mentioned, we still carry out reverse logistics for other categories as well as e-commerce companies are absolutely ill-equipped to manage the reverse supply chain.

We carry out reverse logistics for e-commerce players, organised retailers and manufacturers.

How much repair and refurbishment happens in this industry? Are there multiple players carrying out repairs?

HC If you look at the reverse supply chain in its entirety, there are many small players who will do repair and refurbishing. There are lots of 'mom and pop' stores who carry out repairs.

But those stores don't sell the products like you do?

HC They don’t sell the products after carrying out the repairs as they are basic repair shops. We take these products and have agreements with OEMs too. Either we take products on consignment basis from companies, repair and share the profits, or we buy the products outright which become our property. We repair, refurbish and then resell them in the market. We are creating an organised channel to sell factory seconds, surplus or refurbished products.

When did you start off with GreenDust.com and organised stores for GreenDust?

HC The company was incorporated in 2008 but officially the greendust.com channel and the franchisee outlets started about a year and half ago.

How many centers do you have for carrying out the repairs?

HC We have a hub and spoke model wherein we have hubs in Bengaluru, Delhi, Cochin, Chennai and other places. It ensures local acquisition, repair and disposition strategy.

We have 11 hubs, the value added centers, and they are connected to 23 odd distribution centers that are connected to about 50 plus franchisees.

What discount do you offer to customers as you sell refurbished products?

HC We have different products like refurbished, factory second or a surplus product. On surplus items, the discount may not be much but on products that are factory second, we give about 25 per cent discount on market operating price (MOP) and not on maximum retail price (MRP), otherwise the discount will be more substantial.

Also, we have realised that customer will be okay with about 25 per cent discount and will come in and purchase a factory second product. Earlier, customers used to compare us with grey markets like Nehru Place or Gaffar Market in Delhi but as the trust started to build, people have realised that they get even better service than new product. That way we are building up trust in our brand. As for price, if I only compete on the price band then we are going to lose the battle. The brand GreenDust stands for good price, service and also about environmental responsibility. If the return rate is 4 per cent and GreenDust is able to decrease it by even a per cent, I'll be absolutely happy as otherwise all this material would have gone into the ground and polluted our environment.

Do you think the Indian consumer is that mature to buy a repaired and refurbished product in place of a new product?

HC If you look at the Nehru Place or the Gaffar market, they have never been impacted by recession and have still been growing by leaps and bounds. If customers get a discounted product which comes with a warranty and service back-up, they'll surely pick up such products. I don't want people to relate GreenDust with cost but realise that they are doing something good for the environment too. It's like the red-headed step child of any company that we are making into a blonde-haired blue-eyed boy and then somebody adopts that machine. I'd want our younger generation to relate more to the cause. If you are able to reduce all this junk that goes into the environment and still give a value proposition to the Indian consumer, it will be fantastic.

Until a few years ago, companies were not focussing on their reverse supply chain. How has the scenario changed now and what challenges did you face while setting up your company?

HC The biggest challenge faced was educating companies on the impact of reverse logistics on their profitability. Most of my time was spent in telling people that here is something that is really impacting your bottomline, customer service and productivity that you need to seriously look at. It took time to do so because there is no single owner of reverse supply chain in companies. But slowly, now these companies are realising the importance of reverse logistics and that is the reason companies like ours are charting a new path.

Apart from this, what other challenges are involved in reverse logistics for consumer electronics?

HC Highly fragmented logistics and transportation industry in India is the biggest problem in carrying out reverse logistics. Also, there are different rules in different states. These are the two big challenges that we have faced. Since there was no organised process, even within companies there was a lot of corruption in this process.

Do you have tie-ups with logistics service providers for carrying out services?

HC Yes. We don’t own trucks. We have created a virtual transportation network. Our IT platform is extended to our small and large transportation partners. We have a huge portfolio of courier companies, trucking companies whom we tell, through our IT platform, where the pick up needs to happen. They carry out the pick up and our IT system is updated. So we get complete and total transparency. What is interesting is that we have created a virtual transportation company utilising the highly fragmented nature of the Indian logistics industry.

Who are your competitors in this business?

HC Today my competition is the highly unorganised sector. If you look at the reverse supply chain, it requires transportation so there are transportation companies who only focus on that. If you look at repair, there are some small repair shops that are around to do some repair work, some for home appliances sector, some for consumer electronics and some for IT sector. If you look at reselling, it is a highly unorganised resale market of factory seconds which take place in markets like Nehru Place and Gaffar Market in Delhi, and Lamington Road in Mumbai.

Also, the biggest competition for me are the scrap dealers who function in a very unorganised manner. They pick up the material, dismantle it, sell some parts, pour acid on it, take out any metal or plastic from it and sell it at a bulk rate. OEMs deal with many such small players as it is unorganised. For instance, LG was dealing with 400 such small players before we came in.

Don't the bigger logistics service providers provide reverse logistics too for companies?

HC Many of the larger service providers say that they do reverse logistics but they do so as they want to get the forward logistics business too. Ninety six per cent of the material is going forward in full truck loads. They may do the reverse logistics too, but the problem with reverse logistics is that the pick up happens from the customers' door step, which is not an easy task. Most of these companies actually shy away form it as it is very painful and that is not where they make money.

How does effective reverse logistics reduce costs?

HC Effective reverse logistics reduces returns management costs by up to 25 per cent and improves customer return experience by over 100 per cent. It also helps companies in avoiding channel conflict by 90 per cent and reduces leakage too by up to 80 per cent. This also provides a trusted partner to companies to manage their electronic waste.

Also, what happens is that many of the factory seconds go back into the new channel and are sold to unsuspecting customers stating as a new product. Companies will not do it but small retailers would do it. One very imp thing that these companies don't realise is that scrap dealers may sell used products to retailers who in turn may sell the branded product with non-genuine parts to someone. If something goes wrong with the product, consumers will sue the brand and not the small-time retailer. So, we sell the repair and refurbished goods through our channel to ensure such things don't happen.

Upasana Rajpal, EFYTIMES News Network


Print Email Post Comment 
(Total Views: 2698)
 
Share

 
 
Infotech News
   
WalkOn App Rewards People For Activity, Makes Fitness A Status Symbol
YouTube Acts As An Informal Friend For Patients With Mental Illnesses, Research Claims
Apple Roll Out iOS 8.1 Update!
Asia's Largest Convention On Open Source Is Back
Xiaomi Redmi Note Price Confirmed In India
 
 
 
     
     
     
     
     
     
Most popular
 

Daily

Weekly

Overall

Agility Systems Deals in:

Document Management System for law firms
Features
Android 5.0 Lollipop: 10 Most Exciting Features
Since the preview, Google has added lots of new features to the final release of the latest Android version. Here we will discuss top 10 features of m...
GPS Technology: Know The Basic Facts
Let's take a look how this GPS technology is operated in our daily uses....
10 Best Open Source Web Application Security Scanning Tools
Here we'll provide you with a list of 10 open source tools which are used to detect security vulnerabilities in web applications....
5 Ways In Which NFC Can Transform Your World!
Let’s have a look at 10 ways how NFC can actually rock your world in the near future....
10 Exciting New Open Source Projects!
These projects cater to several categories like web content management, software defined networking, IT management, operating systems and more....
20 Open Source Alternatives To Video And Audio Apps
Here is a list of 20 such tools which make it easy to create, listen to and view digital audio and video content....
LED Technology: Know The Basic Facts!
Here we'll brief you about the LED technology and some top tutorials about the technology for beginners as well as advanced learners....
10 Best Browser Extensions Which You Must Have!
Here we are providing a list of 10 coolest Internet browser extensions for you, which are mostly cross-platform....
5 Most Exciting Job Opportunities For Video Game Developers
Demand for video game developers is always on a high and game studios usually pay handsome money to these developers....
10 Most Powerful Women Shining In The Tech World!
Though women are vastly outnumbered by men in this industry, we can still find out 10 most influential high-profile women in the tech world....
10 Personalities Who Redefined The Internet World!
Let's have a look at those 10 personalities who have transformed the Internet world in a bigger way....
10 Most Amazing Facts About 3D Printing Technology
3D printing technology is advancing fast and is becoming an integral part of mainstream technologies in the society....
10 Amazing Robots Transforming Medical World!
Here we will talk about 10 most useful medical robots which have huge potential to transform the healthcare sector....
7 Best Tools To Ensure Browser Security
Here is the list of 7 such browser security tools which you may find useful....
10 Best VPN Service Providers To Ensure Online Privacy
If you are using your home Internet or public Wi-Fi, VPN providers will ensure best security features and privacy guarantees....
 
  View All
Dialogue
 
10 Questions That Google Never Asks While Hiring!
Here is a list of 10 questions that Google just banned from their interviews....
For Enjay, Open Source Technology Is A Way Of Life
An entirely open source-based company, Enjay IT Solutions, has built itself a reputation in the OSS domain....
Switching To Tizen Doesn’t Mean We Are Abandoning Android: Samsung
The company has worked to build Tizen up from scratch and has now introduced it to developers and the general public with its latest range of wearable...
Venturing Into The Cloud? Develop A Customised Cloud Strategy First!
Diksha P Gupta speaks to Rushikesh Jadhav, cloud evangelist, ESDS Software Solution Pvt Ltd, on how the cloud has changed the way compan...
HTC Is Strong And There Are No Plans Of Sale Now Or In Future, Says HTC's Senior Director-Marketing
Atithya Amaresh from EFYTimes had an exclusive chat with Sirpa H. Ikola, senior director, Marketing, South Asia, HTC about its devices and its plans w...
   
  View All
Videos
 
First Look: LG Optimus G
The phone sports a high-end display and comes powered by a powerful processor. ...
Create QR-Codes For Free
TEC-IT releases the freeware QR-Code Studio to provide a quick and convenient way of QR code creation for every application scenario....
DoT Secretary Shares Plans For Growth Of Telecom Sector
M.F. Farooqui has recently taken charge as secretary, Department of Telecom....
Hands-On: Sony Xperia Z
Xperia Z is Sony's first entrant model in the big-screen smartphone category. ...
Hands On: Videocon A30 Smartphone
Videocon, the consumer electronics company which is known for its refrigerators, washing machine and air-conditioner has unveiled its Android-based sm...
   
View All
   
 
IFA 2014
 
IFA 2014: LG Launches 34-Inches Curved Monitor
The company is yet to confirm price and availability of the device....
IFA 2014: Intel Launches First Core M Range Of Processors
This range of processors is tailor-made for 2-in-1 devices which include a tablet and a laptop....
MWC 2014: Tablet Lets People Feel Textures On Its Screen
Now feel what you see on your tablet, by way of ultrasonic waves....
MWC 2014: 4K Android Tablet Games To Kill Consoles, iPad
Tablet makers like Samsung want to beat the iPad by making 4K tabs. ...
MWC 2014: This Vodafone Backpack Helps Get Network In Disaster Situations
Two engineers of Vodafone New Zealand displayed the "mini" mobile network by Vodafone substructure in a backpack. ...
MWC 2014: Wilocity Chipset To Bring 'Lightening' Speed To Mobile Phones
Wilocity has developed a WiGig chipset for mobile phones that will bring lightning-fast wireless capability ...
MWC 2014: Samsung Introduces Octacore, Hexacore Chipsets
The Korean giant, Samsung unveiled two new octacore and hexacore chipsets at MWC 2014, in Barcelona. The company previously used Exynos 5 Octa 5410 ch...
   
View All
   
 
Events
 
19th Consumer Electronic Imaging Fair To Be Held On ...

View All
   
   
 
 

home archives contact us advertise with us
           
Magazines Portals Directories Events News Verticals Educational Institute  
Electronics for You
Open Source for You
Electronics Bazaar
electronicsforu.com
efytimes.com
opensourceforu.com
electronicsb2b.com
Electronics Annual Guide
EFY EXPO INDIA
EFY EXPO WEST
ELECTRONICS ROCKS
EFY Awards
OSIDAYS Expo
Electronics
Infotech
Linux & Open Source
Consumer Electronics
Science & Technology
BPO
EFY Techcenter

Educational Kits
Kitsnspares.com  
 
 
© Copyright 2014 EFY Enterprises Pvt. Ltd.
All rights reserved. Reproduction in whole or in part in any form or medium without written permission is prohibited.
Usage of the content from the web site is subject to Terms and Conditions