Debunking the Myths of Customer Returns and the Use of Liquidation Channels
No retailer (including store, catalog and online merchants) wants to see products returned, but as the National Retail Federation reported in 2008, more than $219 billion of merchandise made its way back to retail stores through consumer returns. Many astute companies, however, are winning customer loyalty, decreasing costs and creating positive revenue by effectively managing their returns processes.
In a session at last month's Internet Retailer Conference & Exhibition in Boston, I examined the top three myths of consumer returns — and their related realities — that exist in the retail industry today.
Myth No. 1: Consumer returns are bad for business.
Reality: Consumer returns should increase customer loyalty and return substantive value.
Forrester Research finds that 81 percent of consumers are more likely to buy from an online retailer that makes it easier to return products, while 73 percent of consumers are less likely to buy in the future from an online retailer that makes the returns process a hassle.
Retailers who solve the occasional problem effectively for customers create far more loyal and frequent purchasers than those that don't. Customer-centric retailers seek to ensure the utmost in customer value by embracing returns as methods to reduce defects and improve customer loyalty.
Myth No. 2: Returns should be aggregated in a central location, processed cheaply and held to sell in bulk.
Reality: Lean engineering optimizes net recovery and sales-cycle time.
Managing returns is not, nor should it be, the core competency of retailers. The operational execution behind a return traditionally has been an afterthought. The practice of stashing returned items in a central warehouse is common. This practice almost always creates an unnecessary drag on a company’s financial performance, however.
Seek the expertise of an outsourced solution provider to develop a “lean engineering” process that makes it easier for customers, reduces the number of times products are handled/transported, reduces the cycle time and optimizes recovery.