Posted in Operations and Supply Chain Terms, Total Reads: 137
Definition: Return Disposal Costs
Return disposal costs are the costs associated in transporting and packaging, when a customer returns a product. The cost is now sunk and this costs are minimized by the e-commerce companies and by the retailer too.
It takes a lot of time, storage and training to ensure that the return is done in a supportive way, whether some repair needs to be done and the customer is not bluffing, etc. These costs are reduced by cutting off administrative and transportation costs by opening their own warehouses at certain places all over the country.
Retailers don’t have an easy task when they dispatch an item, i.e. they don’t get their payment till the deadline when the customer can return the product is over. Retailers have to accept all kinds of returns, ranging from whether the customer didn’t like the color, fit, price, etc. to whether he just wanted to try the product. Maximum return of the products is during the festive and winter season.
This is when 3rd party logistics come into play through outsourcing as they reduce the transportation costs. Companies have now started limiting the number of days till a customer can return the product and charging shipping fees as per the size and value of the product to reduce return disposal costs.
Companies try their best to reduce the return time to satisfy their customers and at the same time gain a competitive advantage.