The importance of returns in the sales process

by | Sep 9, 2015

Retailers who were new to drop-shipping last year likely learned many lessons when returns started coming in. Without a clearly identified and communicated strategy for returns, the process quickly becomes unruly. Retailers rarely prepare a well-thought-out and comprehensive return strategy when the holiday season is at hand and the focus is on sales promotions and inventory levels.

retail-returnsThe primary question is whether retailers want to collect the returned items themselves or have their suppliers or 3PLs manage all the returns. In an omnichannel world, the answer isn’t always simple. Retailers also need to determine what happens if the consumer orders online, receives a drop-shipment from the vendor and then returns the item to the store, or buys in-store and wants to return it via UPS. Should the item be recycled into the store inventory (if carried in-store), returned to the supplier or managed by a reverse logistics provider?

What I’ve learned is that retailers are enthusiastic about partnering with drop-ship vendors who fulfill the order on their behalf, but they often forget to work out a returns process. Retailers often end up managing their own returns, because they didn’t think through the whole process. But this is a conversation that needs to happen as retailers, suppliers and 3PLs work out the details of their new partnership.

In some cases, the vendor is willing to take the returns. In others, the vendor wants the retailer to accumulate them and ship them back in bulk. Sometimes the retailer wants the vendor to handle them completely. So the retailer has to decide whether they can take in all the returns and store them in their warehouse, or hire out a third-party returns vendor. Some retailers will even offer the goods in an employee store or as a closeout or liquidation, and use the revenues they generate to offset their losses.

As retailers enter new drop-ship relationships with their suppliers, they need to establish the process up front. They should decide whether they want consumers to call a customer service representative at the retailer for a return number and labels, or have return information included with every shipment. Once they have this information, they need to provide it to suppliers who will then include it with the product information they send to consumers, usually done on the packing slip.

While there’s no one “best” method of processing a return, it’s important to find a method that is easy for consumers and will cause the least amount of disruption for the retailer and supplier.

If you’d like to learn more about streamlining the order fulfillment process, please contact SPS Commerce.

Scott Bolduc

Director of Supply Chain Strategy at SPS Commerce
Scott Bolduc is a multi-time winner of the Supply & Demand Chain Executive Pros to Know. He has worked with e-commerce retailers on their growth strategies and helped retailers transform their freight spending strategies to maximize efficiencies.
Scott Bolduc

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