Product Returns - a Necessary Evil?
Product returns can be a headache, a waste of resources, or an opportunity. Are you getting the balance right?
Accepting that some product returns are inevitable has been part of doing business since commerce began – or at least for as long as consumer protection laws became a thing! You could think of it as a necessary evil.
- Why an Evil? Because nobody likes handling returns. Wouldn’t running a business with 100% customer satisfaction, and zero returns, be retail nirvana?
- Why Necessary? Because we operate in the real world. No products are perfect, customers make mistakes, and allowing zero returns is likely to be a fast track to oblivion.
The rise of internet-based purchasing around the turn of the century soon led to an explosion in the volume of returns.
The COVID-charged move towards Work From Home and online shopping poured fuel on this already-blazing fire of mixed metaphors.
Let’s look at some numbers:
- The (US) National Retail Foundation estimated $428 billion worth of merchandise returns took place in 2020, representing 10.6% of total sales.
- This CNBC article quotes that 5-10% of in-store retail purchases end up being returned, increasing to 15-40% for online sales.
What drives Returns? Customers do!
The drivers for returning obviously differ from product category to category - jeans will differ from Jeeps – but there are some pretty common themes:
- Not as described
- Wrong size or specification
- Damaged or Defective
- Change of mind
Change of mind? Seriously? As our shopping habits have changed, so have customer expectations.
Accepting returns for a ‘change of mind’ would have been unthinkable for many businesses a couple of decades ago.
These days, ‘no questions asked’ returns policies are common, especially in the world of ‘fast fashion’ retailing.
What began as a necessary evil to encourage sight-unseen purchasing soon came to be seen as an opportunity for savvy retailers to differentiate. Now it is virtually the norm in some sectors. This recent Invesp article concluded that, of the consumers surveyed:
67% check the returns policy before purchasing, and 92% will buy again if the product return process is easy.
In the war on waste, waste is winning
The CNBC article referred to above also suggests that:
- The value of returns will exceed a trillion dollars within a few years
- Of those returns, about 25% are destined for landfills.
Even if the other numbers don’t scare you, that one should! Or, to quote Leonard Cohen dreadfully out of context:
Everybody knows the war is over. Everybody knows the good guys lost.
Managing Returns in Sage 300
Orchid Systems has had a special interest in returns for as long as we’ve been developing Sage 300 add-ons. In fact, our Return Material Authorizations module (RMA) was our very first product.
We don’t claim that it will solve the world’s waste problems, but it has helped many businesses streamline their operations and improve customer service. It lets you integrate robust, repeatable, workflow-based return and repair processes into Sage 300 that can:
- Automatically allocate and track RMA ID numbers.
- Authorize customer returns, and initiate replacement orders.
- Issue credit notes, and return faulty goods to the vendor.
- Generate cross-referenced entries in Sage 300 PO, OE, and IC to keep records synchronized.
- Maximize cost recovery by correctly charging for repairs.
- Identify product quality issues early, allowing you to take corrective action.
- Provide status tracking, based on user-definable status & stage codes.
- Keep customers fully informed of progress and status from a single source of truth.
Find out more by watching the video from our May 2022 Orchid Webinar, "Making the Most of RMA":