December 2, 2003, 12:00 AM

SPONSORED WHITE PAPER: Wrestling returns to Win

(Page 4 of 4)

To reduce costs and streamline the returns process, Internet retailers must base their strategy on an enterprise-wide initiative. The action steps spelled out here offer some insight on the issues and challenges merchants should keep in mind as they begin the process.

  1. Better returns management begins with the right team. Give the team leader responsibility for ranking priorities and making decisions. Incorporate a diverse group from senior management, customer service, distribution, information technology, marketing, and finance. The team’s mission is to assess how the company can more efficiently process returns, identify a course of action and present a plan to the CEO or CFO.
  2. Save time and money. Reduce returns processing time and minimize excessive handling and shipping charges by routing returns directly to their final disposition location.
  3. Competitive shipping pricing makes a difference. Consider reduced flat fees versus variable pricing, which can cause confusion and alienate customers.
  4. Incentives help. Consider offering free returns on some merchandise to generate loyalty and repeat business. Free returns may also be a reward for valued customers.
  5. Don’t make merchandise returns complicated. A simple, clear and direct returns policy can set you apart from the competition.
  6. Gain visibility into what’s coming back and when. Unopened piecemeal returns piled up in a warehouse require extra steps to process and put seasonal or obsolescent merchandise at risk. An effective return system should allow you to monitor return inventory from the point of drop-off to final disposition, enabling distribution staff to know in advance what’s being delivered each business day.
  7. Treat returns as part of a closed-loop distribution process. Pay the same attention to managing returns inventory as outbound distribution to generate substantial savings.
  8. Know the reasons for delays. Analyze the process and points in the returns channel that result in excessive reverse cycle times.
  9. Make returns an asset. Instead of treating returns as a liability, consider strategies that turn returned merchandise into new sales and cost-savings opportunities. For instance, there is no need to order additional merchandise to fill new orders if the retailer knows that unopened and perfectly good items sent in for an exchange will be back in inventory within a few days. Many customers are also willing to pay for convenience and a hassle-free return, creating an opportunity for using returns as an additional revenue stream.
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