Reducing retail supply chain costs of product returns using digital product fitting
Artikel i vetenskaplig tidskrift, 2021

Purpose – This paper investigates how fit uncertainty impacts product return costs in online retailing and how digital product fitting, a pre-sales fitting practice, can reduce fit uncertainty.

Design/methodology/approach – We analyzed the current performance of a retailer’s e-commerce and return operations by estimating costs generated by product returns, including product handling costs, tied-up capital, inventory holding costs, transportation costs, and order-picking costs. The estimated costs were built on 2,229 return transactions from a Scandinavian fashion footwear retailer. We then tested a digital product fitting technology with the retailer’s products and estimated how such technology could affect product returns.

Findings – The cost of a return is approximately 17% of the prime cost. The major cost elements are product handling costs and transportation costs, which together amount to 72% of the total costs. If well-calibrated, the fitting technology can cut fit-related return costs by up to 80%. Our findings show how customers reacted to the fitting technology: it was unable to verify fit every time, but it serves as a useful and effective support tool for customers when placing orders.

Research limitations/implications – Virtual fit verification using digital product fitting is key to retailers to reduce fit-related returns. Digital product fitting using 3D-scanning is more appropriate for some products, but it is unsuitable for products that are difficult to measure and scan.

Original/value – The paper contributes an empirical estimate of retail supply chain costs associated with fit uncertainty, as well as theoretical understanding of the role of pre-sales fit verification in avoiding product returns.

Retail supply chains

Fit uncertainty

3D scanning

Product recommendation system

Return reasons

Product returns

Product return costs

Författare

Emmelie Gustafsson

Chalmers, Teknikens ekonomi och organisation, Supply and Operations Management

Patrik Jonsson

Chalmers, Teknikens ekonomi och organisation, Supply and Operations Management

Jan Holmström

Aalto-Yliopisto

International Journal of Physical Distribution and Logistics Management

0960-0035 (ISSN)

Vol. 51 8 877-896

Plattformsbaserad digital skohandel

VINNOVA (2018-03619), 2018-11-27 -- 2020-11-27.

Handelsrådet (2018:847), 2018-11-27 -- 2020-11-27.

Ämneskategorier

Annan maskinteknik

Transportteknik och logistik

Företagsekonomi

Drivkrafter

Hållbar utveckling

Innovation och entreprenörskap

Styrkeområden

Transport

Produktion

DOI

10.1108/IJPDLM-10-2020-0334

Mer information

Senast uppdaterat

2021-08-13