CLOSING THE LOOP

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CLOSED LOOP SUPPLY CHAINS
 In India, used goods is a bigger market than new goods!!!

 Automobiles – For every 100 new cars sold, 120 old ones are sold; (100 : 150 for
motorcycles)
 Mobiles – Similar trends hold

 Indian households would dispose off used goods worth 115,000 crores in 2015 (Up from
80,000 crores in 2014; 60,000 crores in 2011)
 Global retails is around $12 trillion; around 5-10% is the size of the secondary market ($650
billion)
 Product returns in ecommerce in India – 15 percent

 Estimates suggest that by 2020 ecommerce in India would be $120 billion and around $24
billion would be returns

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MAKING MONEY

 Biggest category – Automobiles, White good, Electronics, Furniture etc.

 Margins – New car 6 to 8%; Used cars – 8 to 12%; Refurbished cars – 16 to 18%!

 On CarDekho.com, a BMW 7 Series (730 Ld) 2010 model that has run 40,000 km
costs Rs. 38 lakh compared with a new model that is priced between Rs. 92 lakh
and Rs. 1.9 crore.
 The cost of a new Honda City (I DTEC E) is Rs. 9 lakh. A 2009 model City that has
run 60,000 km goes for about Rs. 4 lakh.

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REVERSE SUPPLY CHAIN & POLITICS!

Source: Fortune 5
CLOSING THE LOOP

Re-Distribution
& Sales
Recovery

Sorting &
Disposition

Reverse
Logistics

Product
Acquisition

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PRODUCT
RECOVERY

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CLOSING THE
SUPPLY CHAIN LOOP

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 PRODUCT RETURNS AS A PROFIT CENTRE
 Improved customer service & knowledge

 Product Dis-positioning (Pre-postponement!)

 Efficient product returns as a marketable asset

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Source: BBC
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UNDERSTANDING THE RETURNS POLICY

 Time leniency – Period during which returns are accepted

 Monetary leniency – Whether the entire amount is refunded or some process/restocking fee
is charged

 Effort leniency – Hassle involved say for example, establishing identity, proof of purchase,
filling forms etc.

 Scope leniency – Is everything returnable? Or say, items on sale cannot be returned

 Exchange leniency – Returns yield cash, store credit, or only exchange of goods

 Lenient policy increases both sales and returns – Benefits outweigh the costs

 Each of these affect customer behavior differently!

Source: Janakiraman et al. (2016) 12

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