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May 2, 2007
•Article: Returns Management
Returns management doesn't have to be a tradeoff between excellent customer service and effective fraud reduction
On average, across the U.S. retail industry, 9% of all sales result in merchandise returns. The way these returns are handled affects internal operations (store operations, supply chain management, inventory), customer experience, profitability and control of losses due to fraudulent returns.
This represents a particularly delicate challenge for retailers; on the one hand, fraudulent returns are a serious problem, so the fiscal health of the operation requires that every return transaction be scrutinized to make certain that it is what it appears to be. On the other hand, more than 90% of all returns are perfectly legitimate. These customers expect their return transaction to be handled as smoothly, pleasantly and quickly as the original sale. If it is not, the retailer stands a serious danger of losing a customer.
Another less talked-about, but significant margin-shrinking problem for retailers is giving back too much money on legitimate return transactions.
The importance of effective returns management to customer experience is underscored by a recent Gartner Inc. biennial survey of 2,800 U.S. consumers.
For the second time, consumers ranked "making products easy to return" as the second most important service in the apparel segment and third most important service in the department stores segment.
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