Product suppliers and their customers often have one thing in common when it comes to returns: Both would prefer it if they didn’t happen. Customers don’t like having to return a product, and the supplier doesn’t like having to receive and process product returns. For the vendor, it can be a costly hassle to manage returned goods. Along with transport and handling costs there’s also customer service labour expenses and warehousing and storage costs. On top of that there’s the damage to the customer relationship if the return was made because the supplier failed to take adequate steps to avoid it. Continue reading to learn more about how to minimise product returns.
Of course there are some circumstances where products are returned for reasons over which the supplier has no control. A customer may simply change their mind or may have discovered after they placed the order that they require fewer of the item than they originally thought. Of those situations where the vendor may have at least some responsibility for a product return, the most common ones are these:
- Customer ordered the wrong product, quantity or size
- Product did not match the online or catalogue description
- Customer decided that the product is no longer wanted or needed
- Product did not meet the customer’s expectations
- Supplier shipped the wrong product, size or quantity
Naturally to help keep your business running smoothly and profitably, you want to keep your return rates to a minimum. How can you best achieve that? Here are some tips:
How to Minimise Product Returns
If you’re not routinely generating feedback from your prospective and actual customers on their wants, needs and preferences, it can be hard to know what inventory items you need, and in what quantities, to keep them satisfied. While it can be easy to get caught up in a never-ending cycle of responding to immediate customer requests, always allow enough time to regularly talk with your customers.
It’s always smart to keep an eye on what your competitors are up to. For example a bit of research may reveal that one of your rivals is about to introduce a product line that you can’t match in terms of price and/or quality. In this scenario it may be best to lower demand expectations (and therefore orders) for your product line against which theirs competes. Knowing the full range of product and price options that are available to your customer base – and responding to them in whatever ways are feasible – can help you stay competitive and avoid dead inventory.
Without access to a crystal ball to tell you what direction your business sector, and the customers who fuel it, are going to take next, the next best thing is to stay as alert as possible to shifting industry trends. You don’t want to be taken by surprise by an upcoming trend shift that your competitors saw coming but which you didn’t. That monthly industry publication that you don’t really have time to read these days … maybe set a bit of time aside to go through its pages.
When customers have a bad experience you run the risk of losing them. And on the way out they’re likely to tell others of their experience. By maintaining high quality standards you’re in a better position to adequately forecast demand for your products and not be left with stock that doesn’t sell because it’s earned a poor reputation.
If your business uses Enterprise Resource Planning (ERP) software, you can leverage historical sales data and other system-stored information to predict future inventory demand and identify poor performers before they become dead stock. However, this is only effective when the ERP user fully understands how to interrogate, produce reports on and analyse the relevant data. It’s critical that your people get it right, so make sure that your ERP system users are well trained in the technology.
If you’re involved in ecommerce, warehousing, retail or distribution, it’s probably inevitable that you’re going to face a problematic dead stock issue at some point. So what can you do about it? Here the easiest thing to do is also the most unpalatable – give the stock away or destroy it and write the whole thing off as a costly and unpleasant experience. While this will certainly free up warehouse space, from a cost‑recovery perspective it’s got nothing going for it.
Whether you’re in the B2B or the B2C sector, product returns are an unavoidable reality of business life. Your ongoing objective should be to reduce returns to a bare minimum and, when returns do occur, to not have the experience ruin customer relationships or place unnecessary burdens on your business.
If you have put the necessary time and effort into establishing a practicable returns policy and developing procedures to identify why returns occur and what needs to be done to address returns issues, you will be well‑positioned to achieve that goal.
If you enjoyed this blog, please read about How to Sharpen Your Business Intelligence.
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