Don’t Let Returns Burden You With Excess Stock

It’s Christmas shopping season now, but come December 26, Returns and Exchange Season will be upon us.

Returns are a more-or-less unpleasant fact of life. What gets returned and how often depends on what you sell and where you sell it. Fashion and shoes bought online can see a return rate as high as 40%.

Generally speaking, online purchases are sent back at a rate three times more than returns on products purchased from physical stores, up to 30%.

At Christmas time, returns appear to loom larger. In any given year, one out of three gift recipients will return an item.

Still, returns to US retailers for all of 2014 accounted for just a little more than 8% of total sales.

But whether you are selling online, through a retail outlet, or both, if you handle returns properly, you will build brand loyalty, and even get a revenue edge over the competition.

Tie Returns to Inventory

A good return policy that is well-published can build customer loyalty and increase revenue. Nordstrom, Costco, LL Bean are among retail chains with generous and flexible return policies.

They’ll have a no-questions-asked, an extensive or infinite return time frame, a no-receipt required policy, or a combination of these. Companies that have deep faith in their products (and/or have market dominance) can be more restrictive. Apple, for example, requires receipts, records, documentation and a return within 14 days.

Analyst firm Gartner recommends omnichannel companies offer free or lower-cost shipping and return policies, which have been shown to reduce basket abandonment. Customers should also know if they can return items to a physical store. The chances are very high that they will make an additional purchase on when they do.

What you do with returned merchandise will impact your bottom line. If the merchandise is in resalable condition, selling it in future at markdown is just as likely as selling it at full price. Among 300 omnichannel companies in one survey, only half were able to sell returned items at full price.

Whatever you do, returned merchandise will increase your stock. The best way to avoid added cost of excess stock is by tracking returns in an inventory management system integrated to your entire supply chain.