How to Manage Product Returns

Daniel G.


It is normal for some products to have manufacturing defects especially in mass production of commodity products. Such products should have generous return policies for the end consumer.  Goods purchased through the web should also have return policies as consumers are not able to touch and feel the final product before purchase. Depending on your industry the level or returns may vary and can severely effect business profitability. It is therefore imperative that you ensure that the rate of returns is kept as low as possible while not inconveniencing your customers.

Your company must come up with a comprehensive policy that will define the process for returned goods and allow you to keep them to a minimum. Too many returns due to manufacturing defects might result in low sales, bad reputation and lost customers.  Many customers view returning goods as a cumbersome process, painfully slow and an inconvenience. If handled properly, a company can use product returns for its competitive advantage. It can increase its revenue, lower production costs and retain more customers. Many organizations are developing comprehensive return policies which strategically help the business increase sales and maximize customer loyalty.

How to Manage Returns:

-  Ensure that the return policy process is well documented and is accessible to all customers. Have it posted on the web and also have a printed hard copy version in every product.  This will enable customers to have prior information on the terms and conditions for returning the products and will feel safe when purchasing products.

-  Ensure that the return process is effortless and easy for customers. Customers always feel inconvenienced by returns and the easier the process is, the happier your customers will be. Put return labels and the return address on each and every product so that customers don't have to call your call center for directions on how to return a defective product. The process should also be timely and efficient when it comes to unloading, identifying, and reprocessing returned products for resale.

-  The return process should also allow for some returned products to be refurbished and then resold. Limiting scrap can significantly cut down on return costs. Common issues found with returned products should also be communicated with the product management/design teams.

-  Include the cost of returns in your overall product pricing. This will minimize the overhead costs incurred when products are returned.

How to Minimize the Return Rate:

-  Create a quality check/quality assurance department that ensures all manufactured goods meet the company standard specifications. Products that do not meet the company standards should not be distributed for sale.

-  Ensure that you have a feedback avenue in place that allows customers to lodge their comments and complaints. This information might be useful in improving the quality of goods and hence minimizing returns.

-  If you are shipping the goods to the customer's premise, ensure you are using an efficient and reliable courier service. Goods damaged on the way during shipment pose a great loss to the company and the customer.

-  Finally it is important for the company to put strategic policies in place for both controllable and uncontrollable returns. This will play a big role in minimizing manufacturing defects and hence the number of returns experienced by the company.


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