MRL, The Future-GB, Secondary Market/Reverse Logistics

The Study of Secondary Markets and Reverse Logistics

The study conducts a review of the literature to identify corporate, sociocultural, legal, economic, and technological trends that are likely to have an impact on secondary markets. The study also demonstrates how environmental regulations, consumer protection laws, consumer empowerment laws, environmental awareness levels, urbanization, internet use, computing technology adoption, new market growth, and oil price trends have an impact on secondary markets and reverse logistics. The research presented in this essay shows that a number of patterns are vulnerable to the development of reverse logistics and secondary marketplaces. The findings demonstrate why secondary markets are still important in logistics. Therefore, secondary markets are destined to grow significantly in the coming days.

Introduction

Secondary markets have turned out to be an essential component of any global economy. By and large, secondary markets are described as channels which offer outlets meant for unwanted commodities to be bought by customers and resold by the producers. As indicated by Dhakal, Smith & Newbery (2016), secondary markets within the USA have grown by approximately 36 percent for the past five years. In the year 2014, secondary markets accounted for about 2.3 percent of the US economy having an estimation of nearly $430 billion. Secondary markets have not merely generated an additional stream of revenues for firms, but the markets have similarly offered avenues which can be used by manufacturers in improving customer satisfaction. This is achieved by providing customers the possibilities of returning unwanted commodities which they might have bought. Ideally, reverse logistic forms a fundamental backbone of a secondary market. This is because secondary market employs the processes of reverse logistics to get new customers for the products that are produced by the company.

Background

According to Dhakal, Smith & Newbery (2016), reverse logistics is considered to the secondary market prop. For one to comprehend secondary market future, it is essential to understand the difference between forward logistics and reverse logistic. Forward logistic differ greatly with the reverse logistic in different approaches. To begin with, products are acquired whenever a client opt to return any unwanted commodity. Retailers may as well decide to return products which are slowly moving or rather when a manufacturer decide to change packaging techniques (Basiri, Shemshadi & Tarokh, 2013). The reverse logistics feature brings several uncertainties whenever it comes to product supply. Most of the secondary retailers can never predict product types which shall go back, and when such products are being returned as well as their amounts. Secondary markets are outlets which provide channels meant for purchase alongside resale of unwanted products produced by an organization. Secondary markets are an essential part of the American economy which accounts for about 2.3% of the GDP of the country by the year 2012 (Basiri, Shemshadi & Tarokh, 2013). These markets offer different benefits which incorporate providing a vent in support of unwanted commodities, offering platforms for promoting experiences of customers alongside giving avenues for organizations in creating additional sales and profits for the company. Reverse logistics is a fundamental process in a secondary market. It is described as backflow of commodities from clients towards the producers of such goods. The secondary market can never operate when there are no systems which are enhancing products’ backflow.

Product Evaluation and Disposition

Also, products are usually not in a better condition at the time of return (Basiri, Shemshadi & Tarokh, 2013). Therefore, firms should have efficient systems meant for evaluating commodities which have been returned. There should be measures put in place to establish purchasing prices as well as determine subsequent action plans, that is whether to repair, repackage, dispose or recycle such products. The pronouncements concerning product disposition ought to be made by case-by-case of each product which has been retuned (Dhakal, Smith & Newbery, 2016). Due to various reverse logistic features, firms are supposed to develop capabilities like distribution management, flexibility, industrial and geographical expertise, and technological measures to assist in making decisions. Companies should as well take into consideration factors like product price, product size, product lifecycle and go-getter strategies for a firm in decision making.

Why Secondary Market Remains Relevant within Logistics

Secondary markets are playing significant roles within any given industrial sector. Firstly, these markets are acting as drains meant for eradicating undesired or unwanted goods from the marketplace (Basiri, Shemshadi & Tarokh, 2013). They operate equivalently as the human body excretion system. They assist in avoiding market intoxication by defective and excessive products through promoting redistribution and recycling of these products. This is beneficial not to the societies alone but for businesses as well since it assists organizations in handling various issues about regulatory and inventory.

Secondly, secondary markets support the companies’ management systems on customer relationship and quality control. Reverse logistics and secondary market promote clients’ experiences through offering them avenues which they can use in returning products that are unwanted. A survey done by Basiri, Shemshadi & Tarokh (2013), indicated that 96 percent of are not purchasing products of companies when they had for the past periods experienced bad returns for the products they don’t need. The other study done by Dhakal, Smith & Newbery, (2016) showed that firms which have improved operations on reverse logistics have higher levels of consumers’ satisfaction when compared to their competitors. Besides, reverse logistics provides a company with a brand image that assists in increasing competitiveness of these companies (Rogers, Lembke & Benardino, 2013).

Thirdly, secondary market forms a considerable source of income as well as profits for organizations. Several forms are in a position of salvaging return item values through recycling, repairing, repackaging as well as selling such products within the secondary marketplaces. The markets are providing avenues in support of maximizing product values through promoting reuse. Most of the unwanted products that have been returned are seen as the sources of cheap resources that may be generated. Besides, secondary markets make firms be in a position of avoiding fines alongside maximizing tax benefits. This is done through creating outlets for companies to channel products which are unwanted or have been produced in excess. With the progressive secondary markets growth, firms have a better incentive towards investing within reverse logistics.

Literature Review

The parts reviews literature which investigates secondary reverse logistics and secondary market trends which explains why secondary markets remain relevant within reverse logistics. In particular, the review shall delve into the following trends:

Legal Trend

In any business practice, legal environment normally has considerable impact. An essential legal environment aspect which is likely to influence the secondary market and reverse logistics future is the enactment of stringent environmental laws. For the past period, legislations growth which needs companies to act towards various environmental matters responsibly has been implemented. A legal environment within several rules similarly inflicts heavy fines to firms that are engaging in activities which are deemed to be the damaging environment. For example, in the year 2013, an agency of environmental protection in the USA fined Eagle Recycling company $501,000 (Krainer & Glieder, 2015). The company was again instructed to pay compensation which included the cost of clean-up because they found guilty of doing illegal dumping in areas which were prohibited. The trend in the legal environment would prop secondary markets growth through the creation of incentives for firms to make investments in reverse logistics.

The other legal trend which shapes secondary market future is placing tight laws on consumer protection. Several jurisdictions have strong regulations on consumer protection through adding clauses which provide customers the privilege of returning products which have been bought with considerable defects (Basiri, Shemshadi & Tarokh, 2013). The trend would as well offer companies with incentives of creating good systems of reverse logistics and as well help in the development of secondary markets. Besides, most of the developed nations have imposed laws which are prohibiting electronic products resale to countries which are still growing.

Sociocultural Trends

Business activities are influenced by sociocultural environment significantly. Sociocultural trends which have impacted as well as continue to have impacts on secondary markets and reverse logistics incorporate increased environmental awareness level, the increment of endowed and demanding consumers, urbanization, society diversification as well as globalization. Due to higher levels of ecological perception, companies have been challenged towards coming up with strategies in support of minimizing pollution, energy preservation as well as natural resources conservation (Krainer & Glieder, 2015).

Most of the consumers have been empowered via information accessibility as well as present laws thus making them be considerably demanding. The sociocultural trend has augmented pressure for companies to develop proper systems for reverse logistic with the intention of addressing the issue of customer satisfaction (Rogers, Lembke & Benardino, 2013). However, societies diversification has led to the creation of markets where the taste and preferences of consumers are diverse and vary. The variation of taste and preferences is bound to make it easier for firms to do product redistributions.

Technological Trends

The trend in technological use, for instance, computing devices propagation, increased internet usage, the increment in the e-commerce usage have transformed and shall continue changing product distribution alongside reverse logistics (Curtis & Jerry, 2013). ICT fields advancement is as well likely going to augment information flow alongside association supply chain and players. Other technologies like RFID have similarly modernized supply chain management field.

Economic Trends

New markets rise in India, China, Russia, Africa and Brazil is an economic trend which influences secondary markets and reverse logistics fields through the creation of huge markets meant for secondary products. Happenings within global oil marketplaces are as well likely to bear significant cost elements within reverse logistics. The prices of global oil increased in past years leading to transportation cost reduction. This would have positive effects on reverse logistics in global markets.

Business Trends

Several business trends in any business activity have effects as shall continue influencing reverse logistic fields. An essential trend indeed is the supply chain simplification. The other strategy which is being adopted by firms incorporate the establishment of partnership and collaboration. Companies are coming together with the intention of developing common warehouse as well as combined systems of transport (Rogers, Lembke & Benardino, 2013). This is chiefly meant to reduce costs as well as promote effectiveness. Besides, there has been augmented information-sharing levels amongst critical stakeholders incorporating manufacturers, consumers, and retailers in the market.

Similarly, outsourcing has as well turned out to be a significant business trend in reverse logistics. Organizations have shown the tendencies of outsourcing logistics services with the intention of improving inventory management, increasing visibility, reducing costs as well as driving quality of products manufactured. Outsourcing is deemed to an effective strategy meant for augmenting effectiveness and speed up inspection, recovery as well as present returned products to the manufacturers (Antonya, Antony & Soewito, 2016).

Findings

From the literature review, it has been established that different factors are molding the future of reverse logistics and secondary markets fields. The issues raised incorporate the enactment of strict laws on the environment, heightening environmental awareness, putting strong protection laws for consumers, empowering consumers, globalization, urbanization, broader utilization of internet, computer technologies propagation, increments of new marketplaces as well as set prices of global oils. Many business trends which have been noted entail augmented association, supply chain simplification as well as outsourcing. Owing to outsourcing tendencies, several companies which are dealing with reverse logistic services are likely to be established. Nowadays, there is a considerable number of companies that are providing logistic services. These incorporate GENCO, FedEx as well as ASTRA (Dhakal, Smith & Newbery, 2016). The findings from the literature review point out that secondary markets are still relevant within reverse logistics.

Conclusion

Secondary markets have turned out to be a significant economic sector for the past periods. They are general markets which provide channels meant for purchasing and reselling unwanted products. The success of secondary markets is determined by the availability of efficient reverse logistics systems. The paper has outlined trends within secondary markets and reverse logistic fields with the intention of deciding future business prospects within this area. The evidence proposes that secondary markets, as well as reverse logistics, shall continue growing in the coming times. This comes to a result of pressure arising from different elements like economic, legal, technological as well as sociocultural environments. From the outlined trends, it eminent that secondary markets remain relevant within logistics.

References

Antonya, A., Antony, P., & Soewito, B. (2016). Logistics management: New trends in the reverse logistics. Journal of Physics: Conference Series, 710 (1), 1-10.

Basiri, A. H., Shemshadi, A., & Tarokh, M. J. (2013). A closed-loop logistics model for green supply chain management. In Technological Solutions for Modern Logistics and Supply Chain Management (pp. 318-333). IGI Global.

Curtis, G., & Jerry, D. (2013). Recovering Lost Profits by Improving Reverse Logistics. Retrieved from: http://www. ups. com/media/en/Reverse_Logistics_wp. pdf.

Dhakal, M., Smith, M. H., & Newbery, R. (2016). Secondary market: a significant aspect in reverse logistics and sustainability. International Journal of Social Sustainability in Economic, Social and Cultural Context, 12(1), 24-35.

Krainer, F. W., & Glieder, A. (2015). An updated view on horseradish peroxidases: recombinant production and biotechnological applications. Applied microbiology and biotechnology, 99(4), 1611-1625.

Rogers, D., Lembke, R., & Benardino, J. (2013). Reverse logistics: A new core competency.Supply Chain Management Review, 6 (5), 40- 47.