Many of the conversations I have had with my clients and prospects lately seem to all steer towards the same pain point – returns management. Even some of the largest retailers in the world that have mastered the fulfillment process still struggle with handling returns. Why you may ask? There are many complex decisions that need to be made in order to effectively manage the returns process flow.
The first decision is around the general returns policy. Although these seem like simple decisions, they can drastically impact a customer’s buying decision. Take Costco for example. Costco has one of the most generous returns policies in the retail world. Because of Costco’s relaxed return policy, customers have more confidence in buying product from them. Now, not every retailer can afford to offer the generous returns policy of Costco where you can return almost any item in any condition at any time if you are unsatisfied. Most retailers have a return window of 60-90 days that allow you to return product with a receipt for verification. You must perform the proper analysis to decide the best return policy that works for you and your customers.
A lot of retailers today are also covering the cost of returning an item to make the process simpler and cost-free for the customer. By including a return label and a clearly stated returns process in the initial shipment, a retailer can eliminate the need for the customer to call a service center. This decision comes at a cost, but can often impact a customer’s buying decision. If they know that they can order an item online and easily return it, it will create a sense of comfort during the purchase process. A personal example that comes to mind involves buying shoes online. Shoes used to be something I would buy at a brick-and-mortar store, no matter what. A new pair of shoes is something I needed to try on and walk around in before buying. If I ordered these online and they didn’t fit, I would need to return them and not only pay for the process but also, deal with figuring out how to actually do the return. Today, I have confidence in buying shoes online because I know that I will be given directions to a simple returns process that is of no cost to me.
Now that I have gotten a pair of shoes online, I try them on and they don’t fit. What happens if I need the right-fitting pair that day? You may have heard of a concept called BORIS (buy online, return in store). This allows customers to walk into a store and return/exchange items that they have bought from any channel. BORIS is an important piece of implementing a true Omni-channel experience for customers. If retailers can ship a customer product from any location, why should they only be able to return through one channel?
Another difficult decision that retailers face during the returns process is how and when to refund the customer. I have seen stricter policies in which the product has to be physically received and inspected before any refund is generated for the customer. I have also seen the opposite, in which the retailer will refund the customer before the return is even shipped back. It all depends on the type of customer, product, and return policy. Have you thought about what how strict or relaxed you would want your return policy to be?
The final obstacle after the product is returned is determining what to do with the actual product. Does the returned product go back to stock? Does it get scrapped? What happens in the case of an exchange? All of these decisions need to be made inside the distribution center or in the store that a customer returns product to. This is all while the location is trying to focus on moving product outbound to new customer orders. At this point, decisions become complex. You want to provide the best experience to your customer but don’t want to sacrifice on profit. Serious consideration in all different angles must be given when evaluating your choices.
The returns process is often overlooked, but one of the most important parts of the supply chain. It completes the cycle of purchasing and if done wrong can cause complex disruptions to your supply chain. There are many tough decisions that go into returns management however, we are here to help! Bricz can assist retailers to make educated, data-driven decisions while also considering the business impact. Don’t overlook a key piece of your supply chain, contact us today to discuss your options.
Contributor: Kevin Quigley