Controlling product returns

Though the traditional approach of discouraging product returns is no more effective in present market scenario; very high rates of product returns aren’t healthy too. A very high rate of product returns is definitely a signal of something wrong in the organization; either within the organization, or at the suppliers’ or the customers’ end. Depending upon the industry type, the optimum rate of product returns varies among firms. Any returns beyond this optimum rate must be avoided by an organization (Petersen and Kumar, 2012). Let’s find out the most frequent reasons of product returns and the possible solutions that can avoid returns beyond the optimum rate.

Strict quality measures: Whenever there are returns, it is always the quality of the sold products that is questioned first. If the sold products are defective, customer complaints and product returns can never be avoided. It is therefore important to follow strict quality measures during production so as  to ensure that products are not defective at the time of dispatch (Coyle et al., 2009).

Effective supply chain management: Strict quality measures at factory can only avoid production-errors; but one of the common causes of product returns is often the mishandling and delays during transit. Effective supply chain management ensures that the products are not damaged during transit and these are delivered on time without any delays (Wisner and Stanley, 2008).

Better understanding of customer needs and expectations: Often products are returned when they fail to meet the requirements and expectations of the customers (Wisner and Stanley, 2008). Many times the customers make impulse buying especially during the discount seasons; but later on when they find that the product is not meeting their requirements, they return it. So, the firms need to carry out proper market research regarding the 4Ps of marketing mix i.e. product, price, promotion and place to minimize such returns.

Comprehensive analysis of competitor’s strategies: The analysis of marketing mix is definitely important but offers incomplete results in the absence of a comprehensive analysis of competitors’ strategies. It is important to understand that the customers also return a product, not because the product is not good, but because they found a better deal elsewhere. So, the firms must be aware of their competitors’ strategies to minimize such product returns.

Educate sales team: Sales team act as the interface between a firm and its customers. Whether it is the case of online selling or in-store selling, the customers’ buying depends largely on the effectiveness of sales team to handle their queries in a satisfactory manner. The sales team must therefore be well-educated and trained and at the same time instructed to not make any false promises to the customers regarding product’s performance and technical specifications.

After-sales education to customers: Yet another common reason behind product returns, especially in the case of electronics is often that the customers’ fail to understand installation or usage of the products. No matter how superior a product is, it is a waste for customers if they cannot use it. It is therefore important that the products are designed on the basis of ‘ease-of-usage'; and the firms educate their customers about products’ installation and usage by way of online assistance or detailed and easy-to-understand product usage manuals (Charlton, 2005).

Meeting environmental and regulatory requirements: Another reason for product returns relates to non-adherence to the environmental and regulatory requirements of the country which result into compelled withdrawal of products by the seller (Wisner and Stanley, 2008). This is not a customer-related cause of product returns, but this is equally important to be taken care of. By adhering to all such requirements, the firms can avoid these returns.

Encourage customers’ reviews: Customers’ reviews about the firm’s offerings act as a valuable resource  to understand both the features appreciated by customers as well as the loopholes identified by the customers. Thus, by encouraging customers’ reviews, the firms can initiate a process of continuous improvement, thereby controlling product returns.

References

  • Charlton, C. (January, 2005). “Reverse Logistics: Customer Satisfaction, Environment Key to Success in the 21st Century.” Retrieved from: http://www.inboundlogistics.com/cms/article/reverse-logistics-customer-satisfaction-environment-key-to-success-in-the-21st-century/
  • Coyle, J., Langley, C., Gibson, B., Novack, R., & Bardi, E. (2009). Supply Chain Management: A Logistics Perspective. South-Western Cengage Learning.
  • Petersen, A. and Kumar, V. (June 14, 2012). “Get Smart About Product Returns.” The Wall Street Journal. Retrieved from: http://online.wsj.com/article/SB10001424052970203585004574392464143500106.html
  • Wisner, J. and Stanley, L. (2008). Process Management: Creating Value Along the Supply Chain. Thomson South-Western.
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Ankita Agarwal

Ankita is working with the editorial board of Project Guru as a Research Analyst and Writer. With Masters in Commerce and Business Studies, Ankita learned much of what she knows about management through experience. She has previously worked in various financial institutions like Birla Global, HDFC Ltd. and Citi Financial. She is self-motivated and writes for the Knowledge Tank section of Project Guru. She has authored more than 80 articles so far in Human Resources Management, Strategic Management, Finance and Marketing. She likes to pen her thoughts about the latest issues gripping these areas across the world.

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