Every company that sells a product has to deal with returns. The number of returns depends on many things: type of product, type of customers, quality of the product and the quality of the logistics process. Especially, (r)e-tailers who are selling to consumers have a lot of returns.
If there is nothing wrong with the returned product, you will want to be able to sell it to another customer as soon as possible. Preferably, without having to give them a discount because these could be seen as ‘second-hand’ items. We will get back to this later.
In some markets the numbers are staggering. As we shared at the end of last year: the value of what consumers buy and return on a global scale totals to a stunning $642.6 billion per year. It becomes more important for companies to prepare for it when the number of returns is getting higher. To be able to better deal with returns we have outlined 5 key elements for you to manage returns.
1. Know what is coming back
There are pros and cons when it comes to knowing what items are being sent back by customers. A way to know what items are returned is to include return labels with each shipment. It means putting in extra effort but the upside is that these items are trackable, which makes it easier to manage stocks.
It could be argued that companies should not make it easier for customers to return items that they have purchased. Customers might use these return labels more often if they are given the chance. Adding prepaid return labels for customers is making it almost too easy. After all, as a commercial company you’d rather have fewer returns. And the problem with letting customers choose their own method of shipping is that you have no idea what is coming back and when, so you can’t plan for it.
This can turn into quite a mess and processing returns takes up skilled resources, too. Especially, with high-value items we would advise you to make sure the customer has a proper box to return the goods to you. If it is packed properly, chances of damage during transportation are slim, which increases the chance you can sell the item to another customer without, or with a minimal discount.
2. Know why is it coming back
When you have optimized the ease of returning for your customers and also offer this service for free, you can certainly ask for something in return. You can ask customers a few short questions to determine what the reason is for returning the item(s). A great moment to do this is when the customer is registering a return of a product on your website to get a free return label they can use. For the clever online retailers, it could also be another moment to show them alternative items.
The reason why certain products are coming back determines the next course of action, depending on the value.
3. Know the value of the items
It is important to know the value of the product that is being returned. If the value is high, you want to carefully consider the packaging so your customers will receive their items without any damage. If you notice that the packaging is not adequate because items are damaged upon arrival, you need to change the packaging or use a different carrier. Damaged returned items need to be repaired or replaced and cost you more money. And what do you do with the damaged product? You may need to sell it at a discount, which is not something you necessarily want.
If the cost of repairing an item is higher than the revenue it brings in after reselling, it might be better just to scrap the product. Another reason for not reselling returned products is hygiene. Who wants to buy returned (however, discounted) underwear? Yikes!
4. Preparing for resell
If the returned product can be repaired and/or used for reselling, you want to do this as soon as possible. Preferably, the next customer should not even notice that they have purchased a returned product. This is perfectly fine if we are talking about shirts, pants, and shoes. If customers notice they have purchased an ‘old’ item, it is possible that they will demand a discount.
Here is an example how to resell returned goods: If the item was shipped without an additional shipping box, then it is not an issue. But if the item was shipped in its original packaging, you will want to remove the shipping label without damaging the box. Taking the time to do this slowly with a blow-dryer to peel off the shipping label will make the box look new again. Having such processes in place, however, costs money. The value of the products should offset these costs.
Faulty products may need to be repaired or refurbished. Items that have been unpacked may need to be repacked and missing accessories, like spare batteries, may need to be replaced. The closer you get the item and packaging to its original state, the lower the discount will be for the next customer. If you execute this process really well, you may be able to sell all these items at its original price. For this to work, it is important that you have processes and procedures in place to determine which items need to be made re-sellable.
5. Sell it again
If the packaging or product is slightly damaged or has signs that it is not new anymore, you may need to sell the product at a discount. But if there is hardly any damage or none at all, then you can put it back in stock immediately. The sooner the product is added back to your stock, the sooner it can be bought by another customer. And if they return the product again… Well, now you know what to do.