June 10, 2009, 12:00 AM

A simple fix helps ShoppersChoice.com reduce damaged inventory costs

By integrating its various systems, ShoppersChoice.com has reduced by more than two-thirds the time required to assess damaged merchandise, submit damage claims and refurbish items to get them back online for sale.

A timely change in how its data systems communicate helped ShoppersChoice.com LLC reduce the effort it took to process damaged merchandise orders.

Each year ShoppersChoice.com, No. 375 in the Internet Retailer Top 500 Guide, takes back a significant amount of damaged merchandise, including higher-end grills customers purchased on BBQGuys.com that may have been dinged or dented during shipping.

ShoppersChoice.com has been very efficient in processing the customer’s request for a refund or an exchange, but until recently very inefficient in filing a damaged goods claim with the manufacturer or refurbishing an item for resale, says chief operating officer Corey Tisdale.

Previously, when a damaged item was returned the information was entered separately into disparate customer service, order management and inventory management systems. As a result, customer service reps closed out the order once the return was processed, but the damaged merchandise sat on shelves in a warehouse for weeks until fulfillment center employees performed periodic inventory reviews and flagged items that needed to be sent back to the manufacturer for reimbursement or refurbished and put back up for sale online.

“We had dead money sitting on our warehouse shelves,” says Tisdale. “We had disparate systems that didn’t talk to one another and an inefficient paper filing system. It was taking too long to submit damaged claim forms or fix items with minor defects and put them back into our available inventory.”

To fix the problem, ShoppersChoice.com, which does its own platform development work, created an electronic report for damaged goods and integrated the new report with its e-commerce platform, customer service and inventory management programs. With an integrated system and a better reporting process, fulfillment employees now have full access to customer service information and know when a damaged goods order was processed and completed. The new program also automatically logs in when a damaged item has been returned to the warehouse, the status of the damage, where the item is stored in the warehouse, and whether a claim has been filed or if the item has been slated for repair.

A status check feature also tells managers when a claim has been settled or the item repaired and available for sale online. By integrating its systems, ShoppersChoice.com has reduced by more than two-thirds the time it takes to assess damaged merchandise, submit claims or repair items, and put them back online for sale. Better systems integration also has generated a 60% reduction in damaged goods inventory. Only about 1% of freight damage claims are now rejected due to late filing, says Tisdale.

“It pays to be efficient, especially as we look to become a bigger online retailer and control our costs in this very challenging economic environment,” says Tisdale.

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