Innovation in the logistics industry has focused historically on the forward supply of goods, to get them through manufacturing and distribution, and into the hands of customers. The discipline has been geared towards fast fulfillment and rapid returns; the reverse side, around the flow of products back into retail, has hardly had a look in.
But reverse logistics, especially for high-value electronic goods like mobile phones, is a booming trade. Mobile devices are increasingly valuable and sophisticated, and customers are holding onto them for longer. High handset prices and long airtime contracts are prompting users to search-out bargain deals in the secondhand market.
Analyst house IDC says the secondary market for mobile devices is already outrunning the primary one, and will be worth upwards of $57 billion by 2022, growing at a rate of almost 15 percent per year (to 290 million units) between times. As much as 50 percent will be traded back to mobile carriers, either for repair, refurbishment, or resale.
Reverse logistics is also a serious money spinner for mobile retailers, and a timely one too as carriers dig deep in order to fund expensive new 5G networks. Generational upgrades to mobile networks are encouraging users to seek out higher-specced 5G devices, and flooding the market at the same time with a surfeit of well-appointed 4G units.
There is money to be made for mobile retailers if the logistics engine supporting this backwards trade is well-oiled. And there are major incremental benefits, bringing “exponential” gains, if the engine can be swapped-out altogether, and replaced with something that is brand new and intrinsically smart – which is born digital, and fuelled by data.
US distribution giant Ingram Micro has designed such a system, it claims, to automate triage on used handsets, and take reverse-logistics forward into the digital era. At once, it will make the business of reverse logistics a serious money-spinner for mobile operators and device manufacturers, to run alongside their traditional retail offerings.
The system is called REV, simply – for the ‘revolution’ in ‘reverse’ logistics that it promises. The company says a single REV workstation can process devices at a rate of up to 1,000 per hour, or a couple of million per year. “Any make, any model, any software variant,” says Mark Brausa, vice president for reverse logistics and repair at Ingram Micro.
REV runs 100 different tests on each device, including for cosmetic damage, surface defects, display defects, and counterfeit parts. And everything is automated, enabled by camera-based AI. There is no comparison, the company says; current smartphones go through manual checks at a rate of one per hour; the uplift is 1,000 percent.
Alex Paskoff, a senior vice president for commerce and lifecycle services at Ingram Micro, says: “Millions of new cars and millions of used cars are also sold each year. It is the same; new phones need to be returned and refurbished, and used phones need to be resold and redistributed – maybe two or three times in their lifecycle.”
He goes on: “Carriers, retailers, and manufacturers will see the most benefit… If we run at that kind of efficiency [rate], it will revolutionise what has happened [in reverse logistics]over the last 10-to-15 years. The activity in this domain, on top of the just the sustainability overlay, is tremendous.”
Ingram Micro’s REV service is launching this spring. See the video interview below for the full discussion with Alex Paskoff and Mark Brausa.
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