A study to optimize the process of Reverse Logistics in e-Commerce Industry

BB7584 Management Research Project Kingston UniversityA study to optimize the process of Reverse Logistics in e-Commerce IndustryPresented By Pragnya P Sahoo- K1359395Presented to Supervisor -Dr. Benjamin Laker[Word Count 12261 [Excluding Table of Contents,Abtract, acknowledgment, References, tables, Appendixes]

ContentsAbstract4Acknowledgment5List of Abbreviations6List of Figures71.Chapter-1 Introduction82.Chapter-2 Research Aim and Objectives92.1Research Background92.2Objectives of the research:93.Chapter-3- Literature Review103.1Logistics in ecommerce103.2Supply chain Management113.3Reverse Logistics at a glance123.4Reverse Logistics-Definition133.5Dimensions of Reverse Logistics143.6Reverse Logistics A strategic tool153.7Reverse logistics model- A stakeholder approach153.7.1External pressures153.7.2Organizational factors- The accessibility of resources173.7.3Individual factors- The strategic position of the decision maker173.8Review of literature on theoretical developments183.9Summary of literature review193.10Critical Analysis of the literature review204.Chapter-4 - Application of conceptual frameworks214.1Why-drivers (receiver): Drivers in Reverse Logistics214.2Why -reasons (sender): return reasons for Reverse Logistics234.3What: Types and characteristics of returned products264.4How: Reverse logistics processes274.5Product flow in reverse supply chain.284.6The inverted pyramid294.7A decision framework for Reverse Logistics315.Chapter-5- Research Methodology335.1Research Philosophy335.2Secondary Research365.3Primary Research365.4Quantitative Research365.5Advantages of quantitative research375.6Disadvantages of quantitative research375.7Qualitative Research385.8Advantages of Qualitative methods385.9Disadvantages of Qualitative methods395.10Data collection technique395.11Interviews415.12Survey425.13Observations426.Chapter-6: Data Analysis436.1Quantitative Analysis436.2Qualitative Analysis476.3Analysis of the interview536.4Analysis of the observation (participant)547.Chapter-7 Analytical findings and conclusion567.1Customer expectations and behavior567.2Companys perception on RL567.3Stakeholders take on RL577.4Gap Analysis- between consumers expectations and companys perception577.4.1The customer service gap model577.5Conclusion608.Chapter-8 Limitation of the Research619.References6210.Appendices64Appendix-1 Chart-2- The biggest internet firms in each country.64Appendix-2 Chart-3 The leading online retailers globally.65Appendix-4 Supply chain Management model67Appendix-5 Interview Questionnaire68Appendix-6 Survey questionnaire69Appendix-7 Survey results71

Abstract

Today, a large number of companies that offer products are undergoing returns; whether it is a book from an online store, a TV to the electronic retailer or a apparel to a fashion retailer. How companies manage these returns (reverse logistics) varies with the level of focus by each company, because it is enormously tough to essentially make profits on reverse logistics. This study focuses on various stakeholders to improve the implementation of RL. Furthermore, the study discusses the internal operation of the company. For instance, the drivers of reverse logistics, if they operate proactively or reactively and the efforts to recycle the products.The primary data is collected from survey, semi-structured interview and observations (participants).The data collected is qualitative and is analyzed on the basis of customers expectations and behavior to that of the companys perception. The secondary data was collected from various literature, journals and books which were analyzed to review the study conducted on optimizing the process of RL.The data collected is analyzed and concluded that there is a gap between the customers expectations and companys perception. The analytical findings showed that the companys gives less significance to RL considering it as a burden. However there is always a room of improving the process of RL which can begin by preventing returns by investing in technology. Overall, the study depicts the companies are enforced to implement the RL systems by their stakeholders to keep up the brand image and also the lack of alignment between the company provision and the consumers service

Acknowledgment

First of all, I would like to express my deep gratitude to my parents- Sri Banshidhar Sahoo and Smt Premalata Sahoo and brother, Ritchie, without their unconditional love , understanding ,support, patience and motivation , I would have never able to complete my MBA and this project. I also extend my sincere thanks to my best friends, Trishna, Deepak and Rakesh who supported my decision of taking this course and supported me through out.I am highly grateful to my supervisor/professor, Dr. Benjamin Laker for guiding me throughout my research and sharing his valuable feedback with my last minute changes. His valuable inputs for structuring the project were commendable. I am thankful for his inputs which were essential to complete this project.I special thanks to Kent Springdal, who was always proactive in solving my queries in a wise manner. I also thank him for providing me the extensions for my project. His support during the course was immensely appreciable.I am grateful to Anna E Ghebaru-Field and Rebecca Varma for providing with the support and assistance during my course of study.The experience of MBA would remain incomplete without the thanking Janice Chalmers for enhancing my skills and tailoring my profile.I further extend my gratitude to Mr.Anirudh Behera, V.P of IDBI Bank, India. Without the help from this bank, I would have never been able to afford this course.I am thankful to the all the professors of Kingston University for delivering valuable lectures which has added value to my professional career.Last, but not the least, I am highly grateful to my entire 2014 cohort for sharing experience, inspiration and support.

List of Abbreviations

E-commerceElectronic Commerce

B2CBusiness to Consumer

B2BBusiness to Business

CRMCustomer Relationship Management

CSMCustomer Service Management

RLReverse Logistics

FLForward Logistics

CLMCouncil of Logistics Management

PRMProduct Recovery Management

RLECReverse Logistics Educational Council

SERVQUALService Quality Gap Model

List of Figures

Figure-1Forward and reverse logistics process

Figure-2Dimension of Reverse Logistics

Figure-3Stakeholders' claims and firm's responses

Figure -4Research process Onion

Figure-5Drivers in RL

Figure-6Types of returns in RL

Figure-7-process in RL

Figure-8product flow in RL in supply chain

Figure 9the inverted pyramid for recovery option

Figure-10decision framework for Reverse Logistics

Figure-11Research process Onion

Figure-12

Interview structure-Source- Adapted from Saunders (2003)

Figure-13 customer service gap model

1. Chapter-1 Introduction

Ecommerce has given a global platform to its various stakeholders for trading. It has gotten the contenders to the same level of business with a cut-throat competition. This industry has seen tremendous growth in recent years from 1.5 trillion U.S dollars in 2015 , it is likely to cross 2 trillion U.S dollars in 2018(Graph-1). The main drivers of ecommerce development have been the exploration for value and expediency; fast downloads; better shipping; simplified online payment techniques; growing web accessibility and the shift toward smart phones and tablets from laptops and desktops (Euromonitor, 2015). It has challenged the traditional shopping trend and has drifted customers from supermarkets to internet shopping (WSJ, 2015).There are mainly 2 forms of ecommerce; B2B (Business-to-Business) and B2C (Business-to-Consumer).B2B is also referred as e-biz is online exchange of services, products and information between businesses. On the other hand, B2C is the business between companies to the private consumers, also known as online shopping. It refers to online buying from bricks and mortars retailers like wall-mart to pure-click online giant such as amazon. Around 41% of the internet users worldwide purchase online. (Bloomberg, 2015). However, the online shopping saturation rate varies from each country (Appendix-1). The main element of internet retailer is logistics which is the backbone of the e-commerce industries. With time and wide range of products, logistics have become the area of interest for many companies. Initially companies worked on stabilizing the forward logistics to enhance customer satisfaction but with time, the return rate started increasing and the term RL was evolved. It was seen that 5 out of 12 customers return their products online (WSJ, 2014). The company has a huge impact of these returns in terms of costs involved in transportations, packaging and inventory. Handling the returns in RL is a need of the hour as it is a part of customer service to effective handle their returns and provides them with alternative products.Reverse logistics is an area which has to be optimized to make it effective and could add value to customer service and companys revenue.2. Chapter-2 Research Aim and Objectives

This chapter shows the aims and objectives of this research by discussing the background of the research

2.1 Research Background

Companies today cannot disregard the reverse flow of the products and the ways to handle it as huge volumes of returns are increasing globally (Stock et al. 2002). Reverse logistics is a part of returns management which in turn is a part of supply chain management (Mollenkopf and Closs, 2005). Activities concerning RL are often reactive in nature instead of proactive which implies that, it is mostly an outcome of a consumer or downstream channel associate action and not a outcome of a planning decision of an company (Tibben-Lembke and Rogers, 2002). However, organizations can behave proactively to prevent/handle reverse flow. Proactive supervision of products in the reverse flow can have positive impact on the organization (Langley et al. 2008). 2.2 Objectives of the research:

The purpose of this research is to:1. Identify various stakeholders in the reverse logistics and their pressure on the firms to implant the RL system2. Examine the complexity of reverse logistics system.3. Discuss the frameworks and models used in reverse logistics4. Examine the gap between consumers expectations and companys perception in terms of RL by using The customer service gap model5. Provide recommendations for optimizing the process of reverse logistics to prevent returns

3. Chapter-3- Literature Review

This Chapter describes the basic concepts of reverse logistics in ecommerce highlights and discusses the research work of various authors and critically evaluates the gap between the studies. The theoretical perspective of authors is identified during the analysis of their research. A stakeholder analysis is also examined in this chapter. The literature review is designed as recommended by Caulley (1992) of La Trobe University.

3.1 Logistics in ecommerce

Logistics in ecommerce plays a vital role in delivering right products to the right customer timely and efficiently. This effects the customer satisfaction to a greater level and impacts the brand image of the company. There is a huge open war among the retailers to exceed customer satisfaction by delivering best of services. Amazon assures one day delivery and this is a plus point for the customers who cannot wait one day for their products. Ebay offers free /low cost shipping for most of the products. Flipkart also offers low cost but speedy delivery. On the other hand, Argos and curries offers the customers to click and collect form their stores. Customers while making a purchase not only looks for best quality products but also expects a hassle free delivery. An excellent product delivery system can not only help in retaining the existing customers but also winning new customers. There are majorly 2 main types of logistics; Forward logistics where the products/services flows from manufacturer to consumers and reverse logistics where the products flows from consumers back to manufacture (Figure-1)

Figure-1 Forward and reverse logistics processLogistics is a substance that has acknowledged additional attention and is extensively known by the general public in the last 20 years. Transportation companies such as FedEx and DHL often referred to as logistics establishments and their stressed on the overall logistics achievement. During the nineties, the Persian Gulf War subsidized to the augmented recognition of logistics in the US, due to CNN news critics repeated reference of the logistic challenges associated to the 7,000 mile long supply pipe-line to support the war in the Persian Gulf countries (Langley et al. 2008).CSCMP (2012) state logistics as the practice of planning, implementing, and controlling measures for the proficient and effective packing of goods, services, and its related data. This activity is performed from the initial point to the point of consumption for the tenacity of imitating to consumer necessities. Langley et al. (2008) asserted that logistics, in its simplest system, is added inbound logistics to the outbound logistics of physical circulation of goods.3.2 Supply chain Management

SCM is defined as the management of forward and reverse associations in order to deliver high customer value at low cost to the entire supply chain process (Christopher 1998). In 1997, (Cooper, Lambert et al. 1997) defined SCM by considering the 8 processes in supply chain recognized by the International Centre for Competitive Excellence (now named Global Supply Chain Forum): customer service management, demand management, customer relationship management, eProcurement, product development and commercialization ,manufacturing flow management, e-fulfilment and reverse logistics(Appendix-3)3.3 Reverse Logistics at a glance

With increasing consumers in ecommerce industry, reverse logistics (RL) has been become a segment which the manufacturers and retailers cannot overlook. Between 4% -30% of the products are returned by consumers and the total returns are valued up to 6 billion per annum in UK (Bernon and Cullen, 2007).However, managing these returns endures significant costs through inventory, logistics and disposal and recycle, many of the organizations seem to employ inefficient procedure for dealing with these returns. Considering the tightness of the budget in companies, improvising the process of reverse logistics will have an impact on the overall company performance. The RL also has an environmental impact due to the co2 emission from the transportation. The companies majorly focus on providing best of customer services with great quality products and price, emphasizing on the forward logistics (PR News, 2015).However, the design and planning choices are essential to be measured with reverse logistics system(Seuring and Muller 2008).From 1980s to mid of 1990s, the scope of RL was restricted to the movement of materials against the primary flow. With time, the definition was refined and new definitions started to emerge. Rogers and Tibben-Lembke (1998) defined RL as the process of planning, implementing and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value, or proper disposal. However, according to (De Brito and Dekker 2002), this definition is still restricted, because several products are returned to a recovery point and not their source. The RL Association state to the term reverse logistics as all activity related with a product/ service after the point of sale, the ultimate goal to optimize or make more efficient aftermarket activity, thus saving money and environmental resources (Reverse Logistics Association, 2009). RL is a comprehensive zone and, in this particular study, we focused on the management and prevention of retail returns.

3.4 Reverse Logistics-Definition

This section of the literature review offers and analyses RL and other associated theories.In the mid of 1981, one of the initial definitions of RL was defined by Lambert and Stock, they well-defined it as going the wrong way on a one-way street because the great majority of product shipments flow in one direction" (cited in Rogers and Tibben-Lembke, 2001, p. 129). They acknowledged three hitches concerning the flow of products in the wrong direction in a supply chain (cited in Pohlen and Farris II, 1992):Many logistics systems are not equipped appropriately to manage the backward products movementThe reverse distribution costs can be nearly nine times more than the forward flow. The process and procedure of handling the returned goods are not same as that of the products in the forward flow.There are numerous definition of RL and there is a different attention in the different classifications. Carter and Ellram (1998, p. 85) had an environmental emphasis and they demarcated it as "the practice using which companies can become more ecologically proficient through recycling, reusing, and reducing the quantity of resources used". In their definition, the attention was on minimizing the environmental impact of logistics actions in the supply chain.According to Kokkinaki et al. (1999), RL comprises all the operations associated to the reuse of resources. Another broad definition was given by Murphy and Poist (1989), and they defined it as; the movement of goods from a consumer towards a producer in a channel of distribution (cited in Pohlen and Farris II, 1992, p. 36). Their research appeared because of recycling which then had achieved boundless attention in RL. (Murphy, 1986) stated RL could be the outcome of three causes: Initiatives from consumer, where the consumer returned imperfect products back to the business Initiatives from industries where from industry can recycle products that are defective. Initiatives from government where the government sets regulations to recall products.

3.5 Dimensions of Reverse Logistics

To describe the various field activities of RL, Fleischmann et al.(1997) suggested an morphology (Figure-2)

Figure -3 Dimensions of Reverse Logistics

The products which are the objects of RL activities can be distinguished based on used products, packaging materials, warranty returns, production scrap and excess products.From the model above, the time horizon could be either static, short term, medium or long term which is likely to clash with the actors in planning horizon in RL process.The motivation of any company to implement and improvise the process of RL can be cost saving or other economic advantage, government regulation or creating a positive brand image.The company can adopt different kinds of process in RL such as reusing the products, remanufacturing, recycling and disposing.

3.6 Reverse Logistics A strategic tool

Formerly, RL was considered regarded as a cost Centre that was required to be controlled and/or reduced/minimized (Langley et al. 2008). Moving further, the reverse flow was observed as a segment that didnt add any value to the organization, Rogers and Tibben-Lembke (1999) recognized numerous companies where the RL was seen rigorously as a cost Centre and because of that; costs of RL became more. In addition to this, Mollenkopf and Closs (2005) also documented that RL earlier was not noticed as a strategic tool but relatively as an essential cost for the business, a green have to or a regulatory agreement. Additionally, they identify that effective RL practices can reduce the consumers risk while purchasing products which can make a company more competitive because the products can be returned effortlessly. The efficient process of handling the RL by an organization in the supply chain will have a prevailing impact not only on the costs, but also on revenue and consumer benevolence. Research conducted by Mermelstein (2006) demonstrated that if the return management of product is appropriate then customers are likely to shop more, and if the return management is bothersome, the shopping experience would be annoying for the customers making them switch their choices (cited in Jack, Powers and Skinner, 2010). 3.7 Reverse logistics model- A stakeholder approach

3.7.1 External pressures

Stakeholder in an organization is an individual or a group who is affected by or can affect the achievement of the organization goals and objective (Freeman, 1984). The sustainability and success of a firm is significance association of its network of stakeholders ((Clarkson, 1995; Post et al., 2002). Conferring to this, the manager is accountable for the management of all stakeholders' entitlements and not only of the shareholders' benefit. It is the managers obligation to organize the collection of complaisant and competitive interests (Hill and Jones, 1992). The literature on this perspective, RL has highlighted the significance of various pressuring groups in the development process (Smith et al., 1997). The necessities of various stakeholders such as customers, suppliers, NGOs, governmental agencies and shareholders (Guide and Van Wassenhove, 2001) can be seen as initiators of RL implementation. In other words, stakeholders have numerous claims which the company can fulfill via RL accomplishments. For example, consumers may claim long warranty periods, causing returns and restoration activities. Recycling may gratify NGO's request for CSR. These illustrations support the appropriateness of stakeholder concept for seizing the external forces which boost RL. These concepts are clearly characterized in Figure-4. Stakeholders might accomplish their claims through RL activities. Consequently, the first vital question is how companies recognize and arrange various stakeholders. Mitchell et al. (1997), after an in-depth review of the literature, established that the salience of an interest crowd depends on the manager's insight of stakeholder characteristics: power, legitimacy and urgency. Thus, the disrepute of stakeholders progresses as they obtain power, legitimacy and urgency, (Mitchell et al., 1997). As a result, this study anticipates that, of stakeholders claims toward RL activities will have a positive impact on the verdict of the company in embedding RL systems. Built on this logic, this report presents the 1st hypothesis. Hypothesis 1. The salience stakeholder of RL has a positive impact on the possibility of firms to implant RL systems.

Figure-4 Stakeholders' claims and firm's responses.3.7.2 Organizational factors- The accessibility of resources

In the previous segment, the study establishes the significance of stakeholders in RL, and how their claims impact the companies to adopt RL systems. Nevertheless, the intensity of pressure from the stakeholders is not adequate to influence the company to take explicit action (Ullmann, 1985). Administrative and individual aspects might impact the final decision of executing RL programs. Characteristics such as the distribution of resources to RL (Daugherty et al., 2001) and the strategic attitude of the manager (Kopicki et al., 1993) are applicable in the decision to execute RL activities. The accessibility of resources (Ullmann, 1985) is a key structural factor that regulates the detection and effective application of corporate opportunities. Commercial funds are dynamic for the improvement of RL systems. The resources can be made available by accessing the organizational slack; the additional of potential or definite resources which help an institute to overcome the external or internal pressures (Bourgeois, 1981). This slack develops the companys capability of environmental adaptation (Meyer, 1982). Meanwhile, this also enhances the innovative capability of companies (Cyert and March, 1963). The administrative slack perception seems predominantly appropriate for RL. However, these systems need the companys time, labor, machinery, and material, exterior services along with latest technologies, transportation, and IT systems. As a result, this study anticipates that as the companys slack upsurges and the RL resources are plentiful, the possibility of such activities to be executed accelerates. This idea is represented by the subsequent hypothesis: Hypothesis 2. The Organizational slack will have an affirmative impact on the possibility of companies to implant the RL systems.3.7.3 Individual factors- The strategic position of the decision maker

The study reflects an individual strategic inclination of the decision maker as in Fig. 1. The Organizational tactical profile reveal the individual inclinations of senior management. As managers exist in the strategic apexes of the company, their individual views are likely to impact the strategic decisions of the company. In simple terms, the manager and the senior manager of the company can have opposite strategic approaches. A manager with a liberal approach, standing at one side and the manager with a conventional attitude standing approach. The liberal approach is categorized by dynamic exploration for the gratification of stakeholders' claims, an enduring regulator of the environment, a constant quest for competitive benefit and business opportunities, and low chance to risk. This approach is related with practical array of conduct. In contrast, the conventional approach is related with bigger antipathy to risk, an assurance to uphold the status and consequently with a responsive array of conduct (Bantel and Jackson, 1989; Crant, 2000; Wiersema and Bantel, 1992). Previous literature has recognized these polar deportments with respects to RL. Companies with an inactive attitude will only execute the RL activities as a result of internal and external pressures, which are difficult to avoid and lead to responsive implementation of RL programs (Kopicki et al., 1993). A inactive attitude, in some companies, could be because of what Rogers and Tibben-Lembke (1999) mentioned to as management inattention. On the other hand, a proactive firm does not wait for unavoidable pressures before implementing RL systems (Kopicki et al., 1993). Relatively, the decision maker leads on such type of activity. Based on the above discussion, the study debates that managers with a liberal strategic attitude will be more eager to implement RL. Obstinately, a manager with a conventional strategic attitude will shun alterations and risks and, in turn, will be more implausible to board these activities. This discussion is abridged in the third hypothesis: Hypothesis 3. A liberal strategic attitude of the manager will have a positive impact on the possibility of companies to implant RL systems.3.8 Review of literature on theoretical developments

In the early 1990s, the Council of Logistics Management (CLM) started emphasizing on RL and published papers where RL was predictable as being significant to both society and company (Stock, 1992). (Stock, 1998) described a detailed work on setting up procedure to carry out the RL process. A couple of authors emphasized on reuse and recycling of returned products ((Kopicki et al., 1993). In the mid of 1990s, Thierry et al. (1995) designed Product Recovery Management (PRM) by examining various recovery options , differentiating ; 1)direct-re-use or re-sale;2) Product Recovery Management (recycling ;repair; cannibalization; refurbishing; remanufacturing); and waste management (incineration and land filling). The writers illustrated the recovery decisions rendering to the level of disassembly, and the worth essential as well as the subsequent product. Towards the end of the same year, Kostecki (1998) stressed on extending the life cycle of the products and also discussed on the marketing aspects of reusing the products. The most recent compilation on literature review focuses on either models or frameworks to support the processes in RL or emphasizes on its business perspective (Guide and van Wassenhove, 2003, Fleischmann et al., 199, and Dekker et al., 2003).Recently, Philip Morris (Andriesse, 1999), Canon (Meijer, 1998) and Nortel Networks (Linton and Jonhson, 2000) published articles on analysis of various practices in the process of RL. Meyers (1999) and Rogers and Tibben-Lembke (1999) consulted a survey on logistics managers and found that 4 out of 10 logistics managers ruminates RL relatively insignificant compared to other issues in the company. Parker (1996) has associated the reports of the First Annual International Congress on Reverse Logistics Management that concentrated on the vital role of accounting for environmental concerns. In the early 1997 in US, more than 450 billion lbs. of waste was disposed which was just the benevolent municipal waste. Every year, chemical industries in US, disposes various chemicals such as lead compounds, ammonia, chromium and carbon-based diluters into the atmosphere, water and soil. Considering the environmental issues, Amato (1999) provides a statistical data on the breadth of litter in US. He also mentions about an "eco-industrial park" which is a power house of the company, a pharmaceuticals firm, a wallboard manufacturer, and an oil refinery in Denmark, that broadcasts the concept recycling and resource distribution.Taking the volatility of market, few authors also focused on building tools that would calculate the uncertainty and forecast the return (Nickel et al., 2012) which is even more critical when working with closed supply chain due to increase in complexity and intensity of uncertainty. 3.9 Summary of literature review

At first, the various themes were presented to introduce the basic terms that was necessary to continue the study, such as logistics and reverse logistics.Moving further, various concepts on reverse logistics were presented which is the key focus of this research. Different studies were analyzed which contained different views and focus regarding reverse logistics. For instance, some literature had a more environmental focus, others focused solely on economic factors. 3.10 Critical Analysis of the literature review

Major study demonstrated optimizing the process of RL in ecommerce. In 1999, Stock introduced methods to set up the procedure of RL. Kopicki in 1996 emphasized on recycling on the returned products. Parker detailed study focused on environmental impacts caused due to the transportation used in RL. Nickel in 2012 focused on making a tool to forecast the returns considering the market volatility. New authors stated RL as a CSR which companies adopt as its competitive edge. Analyzing the work of Nickel, it is difficult to forecast the consumers reactions which are highly uncertain. When researches focused on why customers return products, none of the study displayed ways of preventing returns. The stakeholder analysis demonstrated the firms are enforced to implement RL systems. The various internal, external and individual factors play a vital role in implementing the RL systems. However, it can be concluded from the literature review that companies do not accept the RL and consider it as a burden. Unless they equalize the significance of RL to that of FL, the system implemented will not be impactful.

4. Chapter-4 - Application of conceptual frameworks

This chapter explains the conceptual frameworks in reverse logistics and its process. It explains the why what and how elements in RL.

After concisely introducing the concepts of Reverse Logistics, the following section discusses the basics of Reverse Logistics by analyzing the subject from four crucial perspectives: why, what, how and who. Previous studies have contended that these style of characteristics are relevant significant to distinguish reverse logistics (Zhiquiang, 2003; Thierry, 1995; Fleischmann et al., 1997). In this section, we contemplate the following particulars: Why are things returned: The driving forces behind corporations to become dynamic in Reverse Logistics, Why-drivers (receiver), and the causes for reverse flows (return reasons), i.e. Why- reasons (sender); What is being returned: The product features which makes the product recovery striking or essential. How Reverse Logistics is practiced: The different processes in reverse logistic systems are discussed and focus on value recovery technique in the reverse chain (recovery decisions); 4.1 Why-drivers (receiver): Drivers in Reverse Logistics

The process of reverse logistics starts when the products move back in the supply chain or when the products call for a value reclaims or recovery. In standard norms, there is a returning party, who initially had the product and there is a receiving party, who is seeking to repair, recover, redistribute or resell the product received from the returning party. In this part of the chapter, the receivers perspective is identified which is called the driving forces for the businesses to develop an attitude in accepting and accommodating returns.The driving forces are categorized as: (Figure-5) Economic (Indirect and direct) Legislations Extended Responsibility

Figure-5 Drivers in RL

Economics As a driving force, economics is related to all the recovery actions from which the company can fetch the direct and indirect remunerations. However, even without clarity on expected profits, a company can get involved with reverse logistics because of competition, marketing or strategy to prepare themselves for the future legislations. A company may work on optimizing reverse logistics as a strategy, to prevent other companies entering the market to gain the direct and indirect benefits (Table-1)Table-1 Direct and Indirect Benefits of RLDirect Benefits

Indirect Benefits

input resourcesAntedating/hindering legislation

BudgetMarket fortification;

BargainGreen image

Significance recovery

enhanced consumer and supplier relations

Legislation- Legislation signifies that a corporation should recover its merchandises or accept them back, e.g. packaging recycling quotas in Europe (EUROPA, online) and home shopping right to return in some countries as UK (Office for Fair Trading, online). Extended responsibility refers to a set of principles or values, to become sensibly involved with reverse logistics. For example, the issue of Paul Farrow, the author of Walden Paddlers, Inc., with the speed at which consumer merchandises travel through the market to the landfill, pushed him to an inventive venture of a 100-percent-recyclable kayak (, Farrow et al., 2000).4.2 Why -reasons (sender): return reasons for Reverse Logistics

Unevenly, products are returned or discarded because either they lose their functional value or the customers are unhappy with the quality or the products are not needed. This section explains the returns or discard reasons and are listed in the hierarchy of the usual supply chain: Start from manufacturing, to suppliers till the products touch the consumers. Therefore, it is differentiated between manufacturing returns, supplier returns and consumer returns (Figure-6)Manufacturing returns The manufacturing returns are defined as the components or products which are to be recovered in the production stage. This happens for a range of causes, such as, left over raw materials, final or the intermediate products may fail quality checks and have to be revised or by-products may affect the production. Excess raw material and production scraps characterize the product not-needed type, while quality-failed returns come under the faulty category. In sum, manufacturing returns comprise of the following: Excess raw material; Quality-control returns; Production /by-products left-overs.Distribution or suppliers returns The distribution returns denotes the returned products that that are originated during the distribution stage. It refers to the functional returns, stock adjustments, product recalls and commercial returns. Functional returns denotes all the products which are returned due to functional failure or unexpected functioning. An instance is the one of distribution carriers as pallets: their purpose is to carry products repeatedly. Other examples are crates and containers.Stock adjustments is the process of stock re-distribution in the supply chain when an actor re-distributes stocks, for example between warehouses or shops, e.g. seasonal products (De Koster et al., 2002). Product recalls are often initiated by the manufacturer or the supplier and they are the products recollected because of safety or health concerns with the products. B2B commercial returns are those returns which a retailer has a contractual opportunity to return faulty/unsold products back to the supplier. The products returned could be the incorrect/damaged deliveries, to products with a short shelf life or unsold products. In Brief, distribution returns comprises of: functional returns (distribution items/carriers/packaging); Stock adjustments; Product recalls; B2B commercial returns (e.g. unsold products, wrong/damaged deliveries);

Consumer Returns The final category comprises of consumer returns, i.e. those returns which gets initiated after the product has reached the final customer. There are various causes for such returns like: B2C commercial returns warranty returns; Service returns (repairs, spare-parts); End-of-use returns; Change of mind Incorrect product delivery

Figure-6- Types of returns in RLThe reasons listed above are more or less conferring to the life cycle of a product. The Reimbursement process provides consumers the opportunity to change their mind about making a purchase when their needs or expectations are not met. The list of accentuating causes is extensive, for instance, the apparels size, color or the texture of the fabric used. Irrespective of the underlining causes, when a consumer returns a brand new product availing the money-back-guarantee, it comes in the category B2C commercial returns. The other two reasons, service and warranty returns, refer to an improper functioning of the product during its usage, or to a service that is related to the product which can be beneficial to the consumer. The consumers holding a product that is in the warranty period, can return products that do not meet the assured quality standards. At times, these returns can be repaired or the consumer benefits from a new product or they get the money back upon which the product returned required recovery. After the expiry of the warranty period, consumers can still get benefits from repair services, but they can no longer get a substitute product. Products that are returned for improper functioning can be repaired at customers visibility range or sent for repair. End-of-use of product returns denote to those conditions where the consumer has a return opportunity at a particular stage of the product lifecycle. At last, end-of-life returns refer to those returns where the product is at the end of their economic or physical life. Those products are either returned to the OEM because of legal obligations or other companies like brokers take them for value-added recovery (see How section). 4.3 What: Types and characteristics of returned products

A second perspective of Reverse Logistics is what products are actually being discarded /returned. Moreover, it is not only the product that is significant but it is also the characteristics. The following three characteristics of the products have an effect on the recovery mechanism. product composition Product deterioration. The product composition is explained in four phases: Ease of dismantling (removing workable parts from the products). Similarity of constituting elements (contains a product out of one or more components: this has an impact on the recycling process.) Presence of harmful materials (toxic materials in batteries or PCs should be removed before being recycled) Effortless transportation: If the product needs a particular transportation. Collection of old products and distribution of new ones can be moved together which reduces the transportation costs.These features typically affect the finances in RL activities. They regulate whether it will be cost-effective to disassemble and recover parts or to dispose the product assembly followed by recycling. All these features are product inherent and they are determined while in the product design phase. The product deterioration features, which determine the functionality of the product to decide its further use. This intensely effects the recovery decision. Inherent deterioration: The product age during its usage. For instance, a battery with limited life has low reuse options. Reparability: Ease of repairing or upgrading the product. Products like rechargeable batteries can be effortlessly restored. Consistency of deterioration: do all parts age equally? The former has more preference, but is not always conceivable. In the latter case the product can be sent for remanufacturing or parts recovery. Economic deterioration: products may become superseded if their functionality becomes outdated, like PCs. This offers a chance for re-use in market or for parts recovery. 4.4 How: Reverse logistics processes

The how perspective is referred to explain how Reverse Logistics works in practice: how is value recovered from products. Recovery is only one of the activities involved in the whole reverse logistics process. Initially, the product is collected (collection), then, the product is inspected, selected and sorted (combined inspection / selection /sorting process), following which, there is recovery (involve directly or indirectly a form of re-processing), and finally there is redistribution (see Figure 3).

Figure-7- process in RLCollection is, getting the products from the consumer to a point of recovery in a supply chain network. The products are then inspected, i.e. their quality is measured to make decision type of recovery. Products are then sorted and moved depending on the recovery type. If the product quality is (close to) as-good-as-new, then it can be served in the market straightaway by the process of re-use, re-sale and re-distribution. If not, then the other type of recovery technique can be used, i.e. re-processing. Re-processing can arise at any level: product level (repair), module level (refurbishing), component level (remanufacturing), selective part level (retrieval), material level (recycling), energy level (incineration) (Thierry et al., 1995). At module level, the product, e.g. a large installation, gets upgraded (refurbishment). In component level recovery, products are undone and the parts can be used either in the manufacturing various products (remanufacturing). In case of material recovery, the materials are sorted and clustered depending on the quality measured. Lastly, in energy recovery, products are burned and the released energy is absorbed (incineration). If the products doesnt fit in any of the recovery processes, then products are sent to disposal. 4.5 Product flow in reverse supply chain.

In particular, Figure 5 represents a variety of reverse flows arising at various stages of the supply chain. Each reverse flow has accompanied with a cause of return (why) and also with the type of recovery (how).

Figure-8 product flow in RL in supply chain

4.6 The inverted pyramid

The inverted pyramid was introduced to evaluate products and services depending on its value and importance. The concept of theinverted pyramidlayout is comparatively simple. The author ranks the factual information to be conveyed by its significance. The most vital sections of information are presented in the first line, called as thelead. This typically reports the so-called "five W's"(who, what, when, why, where). Consequently, the author is able to determine the key features of the concept. The author then offers the rest of the evidence andinformation detailsin descending order of significance, putting the minimum essential facts for the very end. This inverted pyramid framework is applied to the recovery option of the supply chain.

Figure 9 the inverted pyramid for recovery option. Recovery options at the topmost level of the pyramid are of high significance value, whereas options moving down to the bottom of the pyramid has less value from the products. The returns in any phase of the supply chain (manufacturing, distribution and customer) can be recovered depending on the options both from the top and from the bottom of the pyramid. The general resemblances between the inverted pyramid to that of the Lansinks waste hierarchy which was presented by Dutch Member of Parliament in 1979; prevention, re-use, recycling and proper disposal (www.vvav.nl). The recovery options at the top of the pyramid are of high value and more environmentally friendly than options close to the bottom, which recover less value from the products. Initially, the Lansinks hierarchy was combined together with respect to the ecological responsiveness of the recovery option. Yet, the hierarchy is uncertain. For instance, In the case of paper recycling against land filling, one may go against recycling because the paper is which is decomposable and needs low energy than the de-inking and bleaching procedures essential for recycling. With respect to the financial assessment of each recovery option, that depends for example on the presence of an identical market. Consequently, it is conceivable that a used product has basically no market value, but is very valuable as a collection of spare parts.4.7 A decision framework for Reverse Logistics

This part of the chapter describes the decisions with respect to Reverse Logistics at three phases: strategic, tactic and operational. To shape up this hierarchy involvement the taxonomy of Ganeshan et al. (1999) and the review of Schmidt et al. (2000) is used. Also the traditional functions of a company like procurement and marketing is taken into account. To decide on the process of Reverse Logistics, a company does not essentially have to follow the decision hierarchy step by step. In precise, in attendance of legislation, an organization may not have authorization to decide on recovery option.

Figure-10 decision framework for Reverse Logistics

The entire framework is divided into three decision levels namely strategic decision level, tactic decision level and operational decision level. At the strategic level, the decisions are long-lasting and are difficult to change. To begin with, whether to do recovery or not and if so, then which sort of recovery. The driving forces act as a type of supra-objectives. The reason for returns, along with the in-built characteristics of the product, gives an idea about the highest value recovery of the product. The recovery option can be taken into consideration while designing the product, by counting design for recovery. However, when some decisions remain unchanged, other decisions gets more constrained, with respect to efficiency. Consequently, every decision has an impact on other decisions. At the tactical level, one has to internally assimilate the returned product with the whole organization. To be more specific, the transportation costs, handling costs and the warehousing of returns have to be allocated. Procurement is the main issue taking the returns into account. Hence, one has to adopt an effective forecasting methods. In addition, one has to take care of the instantaneous reactions in the supply chain. To initiate this, companies may ruminate to outsource (fully/partially) return operations. Therefore, synchronizing mechanisms have to be established. Additionally, there are usual production development and inventory management resolutions. However, the value of recovered or recoverable products has to be determined. At the operational level, the production scheduling and control related decisions are taken. The disassembly and reassembly operations are also a part of this level. The comprehensive systems to monitor, control and share sensitive information also operated at this level.

5. Chapter-5- Research Methodology

This chapter describes the two research methods used in this study. The first is the quantitative method which is helpful in deriving the numeric data to assess the situation and get an accurate statistical data. The second type of research method is qualitative method which is obtained from the management of the companies in ecommerce industry.This section of the report also describes the advantages and disadvantages of both the research methods and explains the process of the research.

5.1 Research PhilosophyAccording to Collis and Hussey (2009) Methodology is an approach to the process of research, encompassing a body of methods. In simple words, research methodology consist of various ways and approaches of carrying out the research and also describes how to undertake a research. There are many philosophies accessible to the researches which are exemplified in figure-4. The research process onion establishes the latitude of methodological choices, which can be pragmatic to the research.The following figure-11 shows that there are mainly four extensive research philosophies: positivism, interpretivism, realism and pragmatism. Each philosophy offers a very eccentric understanding on developing knowledge. Positivism- This philosophy addresses the observable details. Positivism supposes that all realistic information is congregated from evident experiences Positivistic philosophy is denoted to Scientific method which is extremely structured and has quantifiable data. This usually consists of quantitative data and statistical hypothesis testing (Saunders, Thornhill and Lewis, 2011).Realism- Realism is a philosophy that is related with scientific investigation and states that reality subsists independent of the mindset. Although a researcher is inclined towards his own experience, the researchers work demonstrates the facts. However, the data collection methods and analysis process differs using either or both qualitative and quantitative data (Saunders, Thornhill and Lewis, 2011).Interpretivism: This is a type of research philosophy which reflects that world and facts are not external and objective. They are informally created by the people. The researcher believes that the research area is an event of a set of situation and entities at a particular time frame. Data collection and data analysis are possible to encompass qualitative data within an inductive process (Rea and Parker, 2006).Pragmatism: This philosophy states that there is never a single view which can portray an entire picture and can have multiple facts to it. It considers the significance of research work is in the results of practical concerns. A pragmatic researcher would gather and analyze reliable, significant and credible data (Saunders, Thornhill and Lewis, 2011).

Figure-11- Research process Onion

Merging the research paradigm, Positivism and Interpretivism, enable to investigate the issue from various angles. A distinctive feature of Positivism- is an effort to create the science of society as precise as expected. Therefore, special consideration is given to the accurateness of positivist approach research measures, the effective use of statistical methods. Among the various methods in positivism, quantitative method is highly recognized. Primary data was collected from interviews that gave a statistical data to carry out the research. As a part of Positivism beliefs, based on the study of the current state, the future can be predicted .For instance, to forecast consumers behavior and taste.In the positivism methodology, the initial phase of the study of consumers is the fact that, the consumer is the Rational Economic Man who makes a rational economic decision to purchase using 2 main parameters; quality and price. Most of the companies, in any industry conducting research on consumers fall in the category of positivism.Towards the end of 1950, Positivism was extensively used in advertising and marketing industries. The research is based on in-depth interviews and projective procedures. Such methods are named as Quality. To carry out this research, highly skilled interviewers and analysts are required to collect and analyze data. Such studies are based on the interpretation of the analysts. Usually the sample size is small and the outcomes cannot be comprehensive to the common population.Hence, one of the conventional approaches, against which other approaches are mere reactions, is known as positivism. This is the only approach which provides the researchers with a direct answer.However Positivism has been highly criticized by interpretivism, realism, critical theory, critical rationalism, feminism and conventionalism (Kuhn,1970). Positivism basically takes for granted the presence of socially created world that interpretivism view as a social certainty.Positivists failed to explain the interpretations of individuals actions and also others. On the other hand, Interpretivism asserts that, the first and foremost step in any social studies is the detection and description of routine reality.Supporters of Positivism claims, the study of behavior of consumers consider the estimation of consumers behavior and the proponents of interpretivism is understanding consumers behavior. According to positivists consider that consumers are rational and organized planned whereas consumers are unpredictable, irrational and contradictory. The positivists believes the study of consumers behavior is the process of purchasing and the interpretivists approach is the consumption in general.Thus, positivism look for evidences and indicators, establishes the relationship between the different parameters, connects frameworks and theories but doesnt take into account the theme of the influence of the scholar (i.e. subject is independent of reality). Positivism uses quantitative methods and interpretivism uses qualitative methods by recognizing the relationship between the subject and researcher.5.2 Secondary Research The most effective way of gathering information is by primary and secondary research. The information of secondary research is collected and analyzed by other scholars. On the other hand, primary research is conducted to get specific information. Therefore, secondary research differs from primary in the following perspective.The individual accountable for the development and conduct of investigation- In a primary research, the investigator is solely responsible of the problem formulation, the composition of samples, data collection, data analysis and presentation of the outcome. The individual carrying out the secondary research has no concerns about what means the information is collected and by what technique.The situation of investigation- A researcher conducting a primary research is responsible for developing the research plan and also structure the interview questionnaire in a way that it meets the information required for the research whereas, the researcher conducting a secondary research is solely responsible for analyzing and processing the data collected by other researchers to gather new information.5.3 Primary Research Primary research is the method of collecting information by any means, other than the data that has been collected, processed, analyzed and recorded by someone else. It consists the data and information obtained from surveys, interviews, observations and experimentation. The primary data can be used to reproduce information acquired from elsewhere to further strengthen the information. Practically, the problem which is being solved has already occurred in other companies or with other people. Hence, it is important to take the data from companys websites, magazine, companys reports and take into account the current practices, process and opinions. Whichever information was used in the report, it is important to mention its source.5.4 Quantitative ResearchQuantitative research is a method of collecting and analyzing the primary data. This kind of research investigation is carried out when there is a necessity of accurate statistical data. This method uses various statistical and numerical frameworks which enables the results to have a detailed quantitative assessment of the parameters.According to (Morgan & Smircich, 1980), the positivist paradigm that triggers the quantitative method is based on the point that the surrounding realism has a neutral ontological configuration, and we as entities constituting it, respond in a definite way to this certainty. The foundation of quantitative methods makes calculations, quantities and measurements and numerical analysis of events (Smith, 1988). Supporters of positivism debate that there is an unbiased fact that can be measured. In addition to this, quantitative data are more precise, valued, endorse the amalgamation and create spontaneous relations amid place in the objective reality of the occurrence (Cassell & Symon,1994).5.5 Advantages of quantitative research Precise and comprehensive data of the problem(Frankfort-Nachmias & Nachmias, 1992) Accurate and clear description of the independent and dependent parameters in the process of research. Firm observance to the goal and purposes of the study, the opportunity of obtaining more impartial outcomes, scrutiny the accurateness of the theory, the formation of cause- and-effect associations. The data is highly reliable and accurate as it is obtained from sociological surveys and experiments, observations and interviews (Balsley, 1970). Minimizations and dismissal of subjectivity outcomes (Kealey &Protheroe,1996) There is a possibility of repetitive and sustained measurements5.6 Disadvantages of quantitative research

Deficiency of information on the situational perspective of the occurrence under examination. Incompetence to regulate all of the situations and background that do not affect the value of the reactions. Limitation to the conclusion of the research because of the clarity of the interview questions and due to firm adherence to the research objective. The incapability of carrying out research of the changing process and occurrence in the changing aspects.5.7 Qualitative ResearchThe philosophy behind qualitative research is the notion that realism is collective experience of the individuals involved in the communication method (Morgan, 1980). The researchers, using this method, pursue the meticulous depiction, the precise decoding and understanding of the occurrence taking place in specific social situation (Fryer, 1991). Interpretation on the other hand is defined as the base of the qualitative research, in which the investigators emphasis on the study of multifaceted theory to classify the association between the perspective and the background of the research investigated the occurrence as well as to reduce the errors (Fryer, 1991).The qualitative research occur in the natural surroundings (Denzin, 1971; Marshall & Rossman, 1989) which means that the subject of the research is the problem that we face in our daily life (Van Maanen, 1983).The process of qualitative method is collecting and analyzing data abler than the quantity and the outcomes of the research can go beyond the proposition and format (Cassell & Symon, 1994).Hence, based on a qualitative study, the interpretation can be categorized by 3 main features.The qualitative method which is the study of dialogue (the text and its application in the discussion).This method enables the study of the quality of informational philosophies that are used by the individuals in the decryption evidence.This method is used to identify contextually-forming factors, i.e. E which stipulates the communicants, the physical perspective of the state of communication, alteration of situational measures that affects the discourse of interpretation (Ting-Toomey, 1984).5.8 Advantages of Qualitative methods

Research of the most accurate picture of the occurrence which cannot be achieved by the statistical investigation. Flexible approaches of data collection, analysis and elucidation. Usage of a holistic methodology to the event under examination(Bogdan & Taylor ,1975; Patton , 1980) Capability to intermingle with study contributors in native language and in terms of background (Kirk & Miller, 1986). The usage of the metaphors are built on primary and amorphous data.5.9 Disadvantages of Qualitative methods

Offset the original objective of the study as a result of changing context of research. (Cassell & Symon, 1994). Drawing conclusion which might have been by influenced by individuals personal experiences. The incapability to examine the general association between the various investigated studies. Absence of comprehensive objective and consistency of the inference, as the respondent is free to decide what to answer. The researcher has to have a very high level of professionalism to gather the necessary and relevant information.5.10 Data collection technique

For conducting a research, the preparation of collecting data could be problematic and complex (Yin, 2003). If the process of data collection is not handled well, then entire investigation can be compounded. There are 2 main types of data collection; primary and secondary (Saunders et al, 2009). For this report, both the types of data have been collected.The secondary data was collected and analyzed in the chapter-3. The data was obtained from various literature sources and was reviewed to get information about the most recent work from various authors. There are six main sources for collecting the primary data; Documentations, interviews, surveys, archival records, direct observations, physical artefacts (Yin, 2003).For this study, interviews, observation and survey was chosen for collecting the primary data. The following table shows the challenges and advantages of each technique.Table-2 research methodMethodsPurposeAdvantagesChallengesUsage

InterviewsTo understand an individuals opinion and experiences and get detailed information on the subject. Can be flexible with obtaining in-depth information Develops relationship with the respondent Effective conversation to get additional information

Can have strict time bound Can be expensive Can be biased Can be hard to analyze

Semi structured interviews Unstructured interviews

Online surveyTo collect statistical data about consumers opinion on returning products online With statistical data ,it is easy to validate the customers expectations Helps in gathering accurate data

Respondents can be biased while filling the online form. Respondents may be not sincere while answering the questions Use the statistical data to present the consumers behavior

ObservationsTo collect data by observing the consumers behavior and employees Data is collected from a real time experience. So it remain unbiased Companies reluctant to aloow the observers as it might disturb the customersUse to get information about how the employees deal with returns in physical stores.

Source Yin(2009)It is highly recommended to combine the data collection techniques like interviews and questionnaire (Eisenhardt, 1989).In this research, survey is considered as the main source of data collection. Interview was conducted mainly for 2 reasons: To find of the companies are intact with the customers feedbacks and expectations. To evaluate the process of reverse logistics 5.11 Interviews

An interview is a research technique for collecting primary data. In this process , a sample of interviewees are questioned in context to the subject of research(Collis & Hussey, 2009).For the purpose of this study, unstructured or informal and semi-structured or formal interview techniques are chosen(Figure-6) to enhance the quality and reliability of collected data by obtaining additional information.

Figure-12- Interview structure, Source- Adapted from Saunders (2003)A list of questionnaire was developed in context with RL for conducting semi-structured interview. A list of questionnaire is prepared for the interview (appendix-5) but the questions varied subject to the flow of conversation. In the informal interview, the questions varied depending on the position of the interviewees. For a better design of the semi-structured interview, some of the topics were encompassed as recommended by Saunders et al (2007) as follows: Opening the interview session Usage of appropriate language Questioning Active listening Good understanding and summarizing Dealing with tough interviewees

However, informal interview gives an opportunity to discuss freely on the topics that formal interviews doesnt allow.5.12 SurveyAs a part of primary research, a survey was conducted by preparing questionnaire relevant to the area of research. The sample size was hundred with 100% response and location was UK. 55% of the respondents are from Kingston University, 20% are from my neighborhood and 25% are my colleagues at work. This survey was conducted to get the statistical data about the consumers behavior and expectations on returning the products online and the return procedure and policy. The set of questionnaire is shown in appendix-5. 5.13 Observations

A series of observation was carried out as a part of data collection. The observation sessions also enabled customer interaction which helped in analyzing the situation in detail.

6. Chapter-6: Data Analysis

This chapter analyses the results obtained from qualitative and quantitative research methods. A survey was conducted to find the consumers experience and expectations on returning products online with a sample size of 100. As a part of qualitative data, interviews were conducted. 5 Employers from leading companies in ecommerce industry were interviewed (Argos, Amazon, currys, the PC world).

6.1 Quantitative AnalysisThe data obtained from the survey conducted have been analyzed using Microsoft excel. The results are shown in appendix-4. The aim of this survey is to- Find the relationships and associations between the outcomes of qualitative and quantitative research. Research on customer's experience and consumers behavior in online shopping and get their feedback on the return policies and procedureto improvise the process of reverse logistics.Analysis of the data from the questionnaire shows that curriculum vitae of a respondent are a fair and reliable indicator of potential customer. Table-3 CV of RespondentsQ1Sexmale65%

female35%

Q2Age GroupBetween 18-3055%

Between 30-4024%

Between 40-5515%

Above 556%

Q3Marital StatusSingle64%

Married36%

Q4Income per annumLess than 20,000 27%

20,000-40,00053%

40,000-60,00010%

Above 60,0005%

A standard application form must always be specified with information such income, age group, gender and marital status. The companies in Ecommerce industry offers products with affordable price. Initially, the customers looking for quick delivery and affordable price were the target customers but slowly it has gain momentum and people of all age group with standard income prefer shopping online (Bloomberg, 2015). The age group between 18 to 30 shop online with men being the dominant with 65%. Around 53% of respondents with income between 20,000- 40,000 has a standard income. Tbale-3-Consumers motivation of respondents Q1How often do you shop onlineVery frequently31%

Often29%

occasionally31%

Rarely8%

Never1%

Q2What types of products do you buy onlineElectronics67%

Apparels, shoes and accessories20%

Books and stationary13%

Q3Have you ever returned a product onlineYes59%

No41%

Q4How convenient was the process of returning a product online?

Very convenient18%

easy30%

Not bad32%

Not easy20%

Q5How would you like to return the product?

Via post16%

Collection home76%

Collection at a local store8%

Q6Do you read the return policies before buying any products online?

Yes32%

sometimes52%

No13%

Q7How fair is the return policy of the company?

Extremely fair10%

Very fair33%

Moderately fair41%

Slightly fair7%

Not fair at all9%

Q8What could be a possible reason for you to return your product?

Bad quality25%

Damaged26%

Didnt like the product when arrived27%

Didnt like the color3%

Change of mind2%

Found a better option2%

others6%

In a recent study by Forbes, the actual reasoning behind online shopping is revealed. Interestingly, it is not only the low price that attracts shoppers but it is the product categorization. A survey conducted (sample size of 1000) by Simon-Kucher & Partners, a global consultancy that counts retailers among its clients revealed that, 24% of the shoppers look for low priced products. Others cited, free delivery option, return policies and process of returning products. Hence, it shows that, customers look for better process in delivering and also returning while shopping online. A survey conducted for this research (Appendix-5), with sample size 100 and target customers in UK, the results were collected over a weeks time. An overall breakdown of the respondents is shown in the following chart.

It can be seen that, 60% of the customers frequently shop online and 51% have returned their products. With a wide range of products available, 67% of the consumers buy electronics and the rest 33% buy other products such as clothes and accessories (20%) and books and stationary (13%). The survey shows that, customers sometimes read the return policies (52%). However, a customer returns the product mainly due to bad quality (25%), damaged products (26%) and unhappy with the product on arrival (27%). The companies have their own return policies but 76% of customers are looking for collection from home instead from going to a local store or via post. The main reason behind this survey is to find what the consumers like, think and expect from the companies. The interview is done to find if the companies are intact with their consumers needs and choices. However, the companies which are high on customers satisfaction have high sustainability (Forbes 2015).6.2 Qualitative Analysis Qualitative Analysis was done by taking into account the opinion and expressions of experts from leading companies of ecommerce industry. The interviewees are the employees who are a part of logistics and supply chain management. The table 2 shows a breakdown analysis of the interviewees.Table-4 Interview detailsCompanyLocationNumber of employees interviewed DesignationYears of experienceInterview dateInterview mode

AmazonSeattle, Washington, US

2In-stock Manager412th oct 2015Telephonic

BOM Configuration Specialist516th oct 2015Skype video call

Currys PC worldLondon, United Kingdom3Store manager1225th sept 2015Face-to-face

Sales advisor725th sept 2015Face-to-face

Knowhow advisor427th sept 2015Face-to-face

Argos

London, United Kingdom

3Store manager520th sept 2015Face-to-face

Retail advisor420th sept 2015Face-to-face

Logistics manager1221st sept 2015Telephonic

EBay

US

2Distribution center operation manager103rd oct 2015telephonic

Software engineer in logistics department48th oct 2015Telephonic

The following section describes the analysis from each company. (Interview questions can be found in appendix-4). Table-5 Q&A of interviewQs noQuestionCompanyAnswers from interviewees

Q1How important is the process of RL in your company?AmazonWe have been focusing on the reverse logistics as its a costly affair and also has an effect on the brand. Our efforts are on making the return process easy for our customers which is a continuous development. The customers tend to spend 18% more while ordering products online and returning them at local stores. So for us, we have been trying to work on our process and policies where a customer can find it easy and cost effective to return the product.

CurrysReturns are usually bad for the companys image and has an impact on our inventories. Although we cannot control the returns, but we have a strict return policy to put a check on the returns. However, we are the best quality products with best packaging.

ArgosReturns are additional workload to the company as its not expected and planned. It costly and time consuming. It is a line running parallel to the forward logistics in supply chain.

EbayLogistics are the most important part of our company. Be it forward or backward. We do understand cost involved in the process of RL but more than cost, its the customer satisfaction that is important to our company.

Q2How frequently do customers return the products and what types of products is often returned?

AmazonCustomers return products only when they are damaged. However, few change their mind and doesnt like the product when they receive it. It is difficult to say the frequency of return products but mostly customers return the apparels and least returned products are cosmetics and home decors.

currysCustomers view the product online and come to store to have a hands on and then place an order. So our return rates are low unless until the products are damaged or has packaging issues.

ArgosOur customers read the product specifications at our stores and also online. They return products of they do not like the product when arrived like the color or the size. The frequency cannot be stated but 2 out of 12 customers do return their product at our stores which increases the cost.

EbayAny product that varies with size color and texture has a probability of returning back. We deal with all kinds of products and apparels are the one which is often returned back. Other than that electronics which doesnt match the specifications like plugs or any other configurations are returned.

Q3How do you plan the reverse logistics, keeping customer service in mind?AmazonKeeping customers in mind, we make the returns as convenient as possible for the customers. We have local stores where customers can return the products. We also have option to return the products visa post. The returning process depends on the types of products purchased. The customers are also given an option of to choose the way to return as per their convenient. Products returned are also costly for the consumers. So we try our best to avoid returns.

currysThe customers return the products in the store. We have a team that work on the product to verify its condition and then we take the back the product. Majorly we deal with electronics so making sure the product has been returned with a proper condition is mandatory.

ArgosThe products returned by the customers are inspected and depending upon the state of the products, it is either repaired or exchanged or disposed. We have a centralized system called as RMA (Return Merchandise Authorization. We also work closely with our customers to know the reasons of why they are returning the products. The process of returns are also documented so ensure that customers feedback are taken into account.

EbayWe have various sellers in our websites. Basically it depends on the seller. The returns are usually via post and the charges are covered while making a purchase. The customers are given options in choosing the option to return the product.

Q4Do you take feedback from customers about the experience in returning the productsAmazonAn overall feedback about the shopping experience is taken. However We have a drop down option for the customers while returning product online.

currysAl overall experience is taken from the customers and we do ask them the reason for returning the products.

Argos

eBayYes, we take feedback but receive very few feedback as I believe the customer is frustrated or may be because they dont care. Anyways, we are planning to launch a telephonic feedback program.

Q5How do you handle the returned productsAmazonIn RL, we collect the product from the collection point and we have a process in place which is called collection, selection, sorting and disposal or recovery. The collection from the customer is done via post or store collection or collection from home. Collection from home is rare and depends on the type pf product.

currysWe dont immediately take back the product. We inspect the product and try to fix them. If the product has functionality issues then we replace them and give the customer a new one. We have a team called knowhow who works on repairing the digital products.

ArgosWe take the product back for repairing and inspection. If its damaged we do replace. We also exchange the products depending upon the customers preference.

eBayThe consumers usually return back the product to the sellers directly. We are kind of the interface giving the customers a platform. We have returning methods by offering to buy and print postage on eBay. Return requests only count as a defect when the item is being returned because it was faulty. Once the buyer return the product, its notified to the seller on the eBays dashboard. The seller has an option to either accept to recline the request to return and offer partial refund. The seller also helps in resolving the issue.

Is not this process long enough?As I mentioned, we are just the interface and we need to be fair for both the parties. For more information on returns, we can visit our website http://pages.ebay.co.uk/help/sell/return-process.html#process

Q6How does the Returned products impact the companyAmazonEvery ecommerce company has an impact because of its returns. Around 5-8% of the revenue goes in refunds. We dont have any planned budget for refunds but we do keep a check on the product types and quality to avoid returns. The impact is high but is unseen. The costs in handling returns are high. The price of RL is more than FL The transportation, inventory, warehouse cost are a part of our RL. A major part of the RL is maintenance where an additional cost is included.

currysIt impacts every part of our business. Like inventory. Its an additional and unplanned cost.

Argos

eBayIt impacts the brand image for sure. And also the returns depends on the sellers and the type of products they sell. Not every product can be returned. And a survey conducted by us showed us that around 89% of the customers buy product after reading the return policy.

Q7What steps do you take to prevent the return?AmazonWe do our best to provide the appropriate product description with images and zoom technology. With apparels and shoes, we provide measuring guides which helps the customers to provide to find the best size. The returns are sometime when customer changes their mind which is again unseen and cant be forecasted. The best way to avoid returns are make the products visibility high. Give as many details as possible.

CurrysWe have lot of product quality checks. Preventing returns are tough. We follow a set of protocols and standards for all the electronic appliances. And because we have a physical store where the customer can visit and have a hands on the products so the customer really doesnt change their mind of color and texture.

Argos

EbayThe best way to prevent returns is by proving best quality products but as we are the interface between the buyers and sellers, the products flows from across the globe. Preventing the returns is completely on the sellers bucket.

Q8Do you have any plans in investing in technology which can help in preventing returnsAmazonWe are the leading company is ecommerce now. Our websites are cost effective and maintained with efficient engineers. We are working hard to resolves the graphics issues but its too early to comment on the investments

eBayWe are working on making our website more user friendly and easy navigation.

6.3 Analysis of the interviewThe following are the points from the interview Companies do understand the importance of RL but as a brand image. The companies with physical stores have an advantage over the offline stores. The consumers are likely to spend more when they return the product via post. The process is overall time consuming and at times frustrating to the consumers. But when the consumer return a product in a physical store, the store offers a variety of other options as well , which increases the chance of purchase The products which are frequently returned, range from apparels to electronics. The consumers often get disappointed with the type of texture and color. This is across all platforms, irrespective of the companys brand value. However, the color of a fabric also depends on the graphical resolutions of the personal computers and browsing system. With electronics, all the companies do follow a quality check and packaging. The companies trying to make the return process very convenient for the customers. They have options like via post, drop at local stores.

The impact of the returns on the companies are high. The companies quickly react to the return instead of responding them wisely. All of them considered returns are an additional cost and work over load. They consider returns as a leakage in the revenue of the company. However, they take the feedback from the customers. The feedback is merely a formal process without any significance. The companies ask the reasons for the returns and not the process of returning. The more complex is the process, the more resistant the consumer gets in making a purchase from that company. Like eBay, the return process is highly complex and lengthy. To prevent the returns, companies focus on providing all small details about the product to the consumer with facilities like zoom in zoom out technology.

Summary - The companies are sensitive towards their returns but they are enforced to do it due to competition and legal procedure. The returns are very complex for a company which acts like a platform for buyers and seller like eBay. Amazon makes its very simple for the consumers but without option of home collection. The physical stores do have an advantage over the online stores. They consumers can view the products and have demonstration before making a purchase and this is the reason why amazon also has plans to open its physical stores in US and India, (Source- Interview). Returns cannot be predicted. They are the outcomes of the consumers reaction. Companies do not invest in technology, may be because of high installation and maintenance cost.6.4 Analysis of the observation (participant)

Observation includes the systematic surveillance, recording, depiction, examination and interpretation of consumers behavior (Saunders, et al., 2012). Observations can enhance the richness of data.The observation was carried out over a period of 5 days at the local stores(Currys and Argos). The observation also included the customer interaction and was recorded in notes. The main aim of this technique was to observe the customer and employees handling the returns at the physical stores. The following are the points observed: The consumers were not welcomed when they came to return the products and their waiting time was high. The customers had to repeatedly explain the issue to various employees which shows that the employees were not aware of the right point of contact. The consumers were left unattended for quite some time which annoyed the customers. The employees lacked in product knowledge which was further disappointing to the customers. The customers were highly non-cooperative during the return process due to long waiting time.

7. Chapter-7 Analytical findings and conclusion

This chapter shows the analytical findings from the observations of customers behavior and with respect to customers expectations, companys perception on RL and stakeholders take on RL. A gap analysis is done between the customers expectations and companys perception using the customer service gap model.

7.1 Customer expectations and behavior

Traders will need to paycloseattention to structure the return policies that are customer oriented," says Paul Bates, the VP of Information Products Group, BizRate.com. "Online purchasers convey us every day that the key to gain their constancy is by improving the level and excellence of customer support." (Source: Bizrate.com Survey). Other significant findings from the study are: 57% of the online shoppers say that the return policies effect their decision to shop with an e-retailer. The three leading products returned are apparels (40%), software(20 %) and books (15 %)(Survey) The ability to exchange a product for another item (58 percent) 78% percent of consumers prefer home collection rather than by mail or returning at a local store.

7.2 Companys perception on RL

The company focuses more on forward logistics and considers RL as a burden and additional cost. During the interview, the management showed lack of interest in managing RL, rather blamed the customers for not ordering the product right. It was also observed that the employees lack in product knowledge which was very disappointing to the consumer. The company should focus on preventing returns not only by proving appropriate details about the product but also in investing in technology which can be of HD videos and virtual reality

7.3 Stakeholders take on RL

This report has examined the backgrounds of implementation of RL. On the basis of stakeholder theory, the perceptions of manager's strategic attitude and organizational slack, the study proposes that the probability of firms embedding RL systems is governed by the availability of stakeholder salience, the accessibility of resources in the firm, and a liberal strategic attitude of managers. Overall, the study authenticates the theoretical controversy. Consumers, employees, and the administration salience with respect to the RL activities have a substantial impact on the final decision of embedding RL systems. 7.4 Gap Analysis- between consumers expectations and companys perception

7.4.1 The customer service gap modelProviding greater value to the consumer is an enduring concern of the companies. This not only comprises of the authentic physical product but also customer service. Companies which do not provide decent quality customer service that meets the of consumers expectations, are tough to sustain in a market. SERVQUAL is a framework to measure service quality(Figure-10). This model is established by Parasuraman, Zeithalm and Berry in 1985 and this can be used by companies across all industries.. The purpose of this model is to: Recognize the gaps amid customer expectation and the tangible services delivered at different phases of service delivery. Close the gap anddevelop the customer service.The model identifies 5 gaps namely: The customer gap- This gap is the variance between customer anticipations and customer insights. Customer anticipation is what the customer expects depending on the availability of resources and is inclined by lifestyle, friends and family, information available and accessible. Customer insight is completely subjective and is based on the level of interaction between consumer and the product.

As per the survey conducted, apparels are the products that have high probability of returns. Thus, the companies holding a physical store and online store, where a customer views the product online and gets a hands-on experience in physical store, has low customer gap.

However, this can gap can be further minimized by providing high quality videos and also home trail must be introduced. Home trails can increase the chance of purchasing as the customers are provided with options.

The Knowledge Gap- This gap is the variance between the customers anticipations of the service offered and the provision of the service by the company. In this instance, the companies are unaware or have incorrectly inferred the customers anticipation with respect to the companys services. If a knowledge gap subsists, then it means that the companies are working on incorrect or non-existing customer requirements.

The survey conducted showed that 78% of the online shopper opts for home collection but few companies offer this service depending on the product. Customers buy online with a mindset of making a cheap deal. But the return process makes the experience expensive.

This Gap can be reduced by taking feedback on the improving the process of reverse logistics as the consumer is a part of the companys stakeholders.

The policy Gap- As per Kasper et al, this gap replicates managements inappropriate conversion of the service policy into rules and guidelines for employees. Some companies find it difficult in interpreting consumer anticipation into precise service. This gap may see consumers pursue a related product w