How do you count the cost of returns?

A guest blog post by Angela and Paul Blackman, Business Growth Consultants at u-look-i-c

Returns Strategy Image.png

As the growth in overall internet sales continues, there are multiple things to consider.  Of course, at the outset all attention is on selling the product, get it out there and make that sale!

However, as part of ‘consumer expectation’, returns should be part of your selling strategy.

We ask - Is your returns strategy delivering what you need for your business to maintain its profitability?

As the percentage of companies promoting intentional choose and return increases. Businesses have to fully consider the implications and available management options pertinent to your business.

We are not saying that maximising consumer convenience is strategically wrong, but we are clear that the inclusion of consumer convenience has an impact on your business strategy.  However, there is another key point that is often overlooked: product returns may also be signalling consumer dissatisfaction which can only be identified via thorough evaluation.

Research from KPMG suggests it costs up three times more to process the return than the cost of processing the original sale. This cost is manageable but not one that can be avoided so ‘value’ has to be obtained for the business from this expenditure.

‘Intentional Choose and Return’ and ‘Consumer Dissatisfaction’

The key point is do you know the difference and are you proactively managing?

Consumers have more choice of vendor than ever and as a consequence the strategy on how to retain the profitable consumer for many is understandably paramount.

We suggest the key solutions are based around dealing with facts more than ever before.

Facts to us are derived from data and consumer insights. This data does need to be evaluated and interpreted to become representative, accurate and answer key points.

Our experience tells us assistance is most needed in the following key areas:

  • Aligning your data realistically make informed decisions throughout the business functions.
  • How to decide what data is required to discover key facts and ensure you understand what is happening and your ongoing options.
  • Assist in designing or choosing available systems to collect the data that drives decisions.
  • Develop processes that deliver data.  All data must be formatted to ‘add value’ and confirm key points of your strategy.
  • How to establish if you should undertake the process internally or outsource.
  • Cost and value the financial options that are relevant to your business.  As an example, if you are outsourcing what should the service be?  Can the relationship with the consumer be different?
  • How to measure and audit the process from both a financial and a brand protection basis.
  • Operate within the Environmental legislation.

We see adding value to your returns process as key when looking at sustainable ‘growth’ as a poorly executed strategy will negatively affect your business.

Product returns are certainly very much part of retailing but can produce ‘benefits’ particularly related to a positive understanding of your consumer ‘needs’ and avoid them feeling dissatisfied.

How we help

As Independent consultants who understand the area of ‘reverse logistics' in detail we can independently assist you make the right decisions.

We work with you to ‘evaluate and understand and implement’ options. We are from a background of high-level design and delivery with some of the largest players over thirty years in the UK and Europe.  As independent consultants we have no loyalties to a particular methodology or provider.

Please contact u-look-i-c Business Growth Consultants for an informal discussion

-- By Angela and Paul Blackman, Business Growth Consultants at u-look-i-c

 

This article first appeared on as an article on the i-look-u-c website.