In this episode Larry Morgan will discuss how a company can go about evolving a return policy into a return strategy. Return policies have morphed from the 30/30 policy, (if you go longer than 30 seconds or further than 30 feet you own it,) to allowing returns on unopened and unused items only, and even then only if the shopper doesn’t abuse the privilege, to allowing unlimited returns for unopened and unused product, to allowing customers to return anything.
With the advent of online sales, the return policy has expanded again to include free shipping on all returns. One thing return policies have always had in common, is that they are only focused on the customer experience; how easy is it to return something. The result has been a staggering rise in returns and an equally staggering fall in profitability. We encourage our clients to evolve their return policy into a return strategy, protecting the customer experience while at the same time, protecting the company profits. A return policy is always a part of that strategy, so keep whatever policy is working for you, and returns are a part of business; you can’t control that. However, there two things you can control.
First, let the returns you receive teach you how to avoid receiving more of them. Your customers are providing you with vast amounts of fantastic data, use that to reduce your return rate. Look at the items being returned. What is being returned most often? Why are they being returned? What condition are the items in when they come back? What condition is the packaging in? What additional information are your customers providing? From all of that information, what changes can you make to the item, its packaging or the information presented to your customer at the time of purchase, that will reduce how often that item is returned? You will be surprised at how easily you can reduce return rates by focusing on why items are coming back and then taking action. This is an instance where the old adage proves true, “An ounce of prevention is worth a pound of cure.”
The second step is either streamlining what happens to returned product when it reaches your facility, or ideally, preventing it from reaching your facility altogether. There are very few companies that have successfully created sales channels for their returns. A vast majority that try, only increase the financial losses returns create.
We recommend partnering with a reputable liquidation company to process all returns on your behalf. An effective partnership will prevent returns from ever reaching your facility, alleviating you from all the costs associated with processing them, and should result in a revenue stream.
Rather than spending money processing returns, they should be a source of consistent revenue, allowing you to recapture some of that lost value. This is what an effective liquidation partner can provide. By focusing on these two areas, your return strategy will account for all stages of returned items, starting at the time the item is first sold (hopefully preventing the return before it happens,) to how you plan to recapture some value after the item has been returned. This will reduce the impact returns have on your profitability, allowing you to protect the experience your customers have come to expect without having to spend all your profit to do it.
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