Selection of logistics provider in online shopping during product return process: Application of analytic hierarchy process method

In today's world, it is obviously that tough business world don't let people to have enough free time. Lack of time, high cost of living and traffic jam cause people not to spare some time for theirself. Especially people who live in big cities have really big problem to reach somewhere. During week, people can not find time for shopping. Therefore, in recent years online shopping is preferred frequently. Thanks to online shopping, people can have access 24/7 availability for shopping. Time is not important, whenever they want, they can shop online. There are a lot of reasons in order to prefer online shopping and thanks to big developments in technology, online shopping becomes indispensable in our life. By online shopping, we have not any problems about traffic jam, time. Furthermore, quite a few brands give a lot of opportunities to customers, such as sales. Thanks to this strategy, brand loyalty is guaranteed and online shopping is made desirable. Online shopping has advantages and disadvantages. Some disadvantages are; •Checking the item: Some people would like to check the item personally before purchasing it. Yet, online shopping does not allow customers to touch and test the item. •Instant satisfaction: After purchasing the item, immediately customers can have a chance to try the product. However, advantages of online shopping outweigh the drawbacks for a few reasons; •Price comparison: Price comparison gives a chance to people to make a decision objectively. There are a lot of online shopping sites and by internet it is quite is easy to make a compare prices. It is also possible to make a compare prices to go physical stores, however it is very tiring when comparing by online shopping. • Variety: Physical stores have not variety of products. Online shopping allows customers many products. •Pressure: In physical stores, because of salesman, we always feel pressure sales. •Saving time: In Turkey, traffic jam is very big problem. By means of using internet, we do not need to earn our time in traffic. •Availability: Whenever we want, it is easy to shop online. Just internet access is enough. •Product return policy: By product return policy, under the guarantee rules the item can be returned. In Turkey, product return policy guarantee people's right. Therefore, in case of dissatisfaction of product, customers can give back products easily. However, online shoppig providers encounter such a big problem in this case. For product returns, a good transportation network and logistics support are necessary. If we assume that internet access in Turkey is almost everywhere, online shopping and product returns can be done from everywhere in Turkey. Companies which offer online shopping need the best strategy in order to minimize cost of product returns. To manage this strategy, they need to choose the best logistics company which can support them for product returns. Frankly, the selection of logistic providers is quite difficult decision. Inasmuch as, it is known that logistics costs take an important place in total cost. The company which are subject into the application in this study has physical and online stores. Its products are in electronic categories such as camera, photo and video, computers and accessories, business and office electronics, car electronics and GPS, portable audio and accessories and so on. After meeting with logistics experts, the biggest logistics problems which are met occur during product returns. Since, it performs a service not only for small electronic house appliances but also big and expensive electronic products. Hence, even a small problem during product return process can cause such a big cost. Therefore, the most substantial decision for productivity growth is to select the best logistics provider for product returns. In this study, multicriteria decision making techniques (MCDM) are researched. Analytical Hierarchy Process method, which is the most appropriate decision making technique for this study, is selected. AHP method analyzes complicated decisions. While analyzing decision, mathematics and psychological science are used. Steps of Analytical Hierarchy Process method in this study are; •Analyzing problem and hierarchy of process •Determining logistics providers for return products •Pairwise comparison •Controlling consistency ratio •Determining priorities of each alternatives Analytical Hierarchy Process method is used for the selection of logistics provider during product returns. Before applying Analytical Hierarchy Process, in order to analyze product return process better, it was made a brainstorming with logistics experts and was determined problematic points in process. Criterias and sub-criterias was determined by means of using fish bone method and an questionnaire was made with datas obtaining by fish bone method. The questionnaire consisting of pairwise comparisons presented five logistics experts. Analytical Hierarchy Process method was applied with the relevant datas which occurred after the questionnaire by SuperDecision software. The criterias in this study are; Cost, Quality, Delivery speed, Technical ability. The subcriterias connected with technical ability are; Opportunities which presented by logistics provider, Traceability, Flexibility, Reliability. Seven logistics companies which are subject to the application in this study. In the current situation, the relevant online shopping provider works with some of them and also it thinks working remaining ones. The result of the application was showed to logistics experts and they found the results satisfying. This study can be taken as an example study for companies which service in online shopping for electronic products. At the same time, it can be applied for companies which serve products in different categories after extension of analysis process. And also if the number of people who reply questionnaire is increased, it can make the objectivity of the result of this study increased.