Ignore those Returns at Your Own Risk!

Last year U.S. consumers returned more than 8 percent of their purchases.  That’s a staggering statistic for a retailer, and a figure that exceeded $200 billion last year.

But despite knowing that a significant chunk of merchandise is certain to be returned, and despite the fact that 80 percent of returned items are not defective, many retailers have yet to implement a serious returns management policy.  Businesses that neglect their returns do so at their own peril however, given that:

  • 58 percent of consumers said that a company’s returns policy was a factor in their decision whether or not to shop with that retailer.
  • The estimated cost of generating a new customer is five times more than the cost of keeping an existing customer happy.
  • Businesses can increase earnings by as much as 5 percent of sales, by implementing a sound reverse logistics process.
  • The Secondary Market is a rapidly growing sector of the economy – accounting for 2.28 percent of U.S. GDP during 2010.  Returned and refurbished merchandise is resold in secondary market venues including outlets, dollar stores, value retailers, auctions and retail salvage operations.

With so much at stake, businesses are increasingly turning to qualified logistics providers for help in developing returns management solutions.  For example, businesses with significant export volumes to Canada, need to ensure that their returns process takes into account the added hurdles of the U.S./Canada customs compliance process, along with the distribution challenges of the vast Canadian landscape.

An experienced logistics provider will offer different options to meet your specific needs, including:

  • Consolidation capability to help meet peak returns volume.
  • Tracking and reporting capability so that your customers are constantly aware of their return’s status.
  • Distribution capability that provides returns to designated warehouse or refurbishment locations.
  • Returns/replacement capability so that customers are provided with required replacement merchandise or account credit on a timely basis.
  • Returns Management Authorization (RMA) capability so that you can better track returned items, and receive “early warning” with regard to any potential defects or product malfunctions.
  • For international transactions, carrier must have the ability to seamlessly transport goods across borders, and to comply with all regulatory and security mandates.
  • Ability to integrate forward and reverse logistics into overall supply chain strategies.
  • Established distribution network that allows returns to avoid unnecessary route detours and warehouse layovers.

Gone are the days when a business could ignore their customers’ returns, and just let them accumulate in an untended pile.  With more than 8 percent of all merchandise destined to be returned, and with money to be made in the secondary market, it’s imperative that businesses put in place a returns management process that meets their needs – and satisfies their customers.  What methods do you use to manage returns?