Purpose of Returns“Effective method for handling an item that does not achieve its

intended purpose”

Cabbage Production70 Days from seed to Market

69 million metric tonnes Globally

China, India and Russia

Who is RMS

In Business Since 1986

Multiple Locations across the United States

Many retail industries – Food, Hard goods, Entertainment,

Sporting Goods, Drug Stores, etc.

Developed own proprietary systems

Operate returns centers and provide system solutions

Return rates by industry

Magazine Publishing 50%

Book Publishers 20-30%

Book Distributors 10-20%

Greeting Cards 20-30%

Catalog Retailers 18-35%

Electronic Distributors 10-12%

Computer Manufacturers 10-20%

Grocery .5 – 1.5%

CD/DVD 18-25%

Printers 4-8%

Mail Order Computer 2-5%

Mass Merchandisers 4-15%

Auto Industry (Parts) 4-6%

Consumer Electronics 4-5%

Household Chemicals 2-3%

Drug Stores 2- 4%

Source: Going Backwards Reverse Logistic Trends (University of Nevada) & FMI/GMA joint study

DVD Returns

Book Returns

Book Returns

Before Automated Returns

10,000,000 units in

annual returns

Accuracy rate of 70% on

orders

After Automated Returns

Returns reduced by 15%

Accuracy rate increase to

99%

Savings of $5,000,000

Customer A

75,000 square feet

1 shift - 55 people

900,000 units/month

5 receiving stations

12 primary scan stations

1500 pallet asset recovery

5,000 RTS slots

High Value Item Returns

High Value Items

Electronic Returns

Unique Product

Relationship between Manufacturer and Retailer/Distributor

Clear communication as to crediting policy

Branding profile/image

Liability/product visibility

Marketing Trends/strategy

Objective of a Returns Process

Maintain customer service experience

Move product out of the selling space

Recover costs associated with returns

Categories of Returns

Defective

Warranty

Out of Warranty

Performance or wrong item

ability for consumer to use

Guilt – buyers remorse

Outdated

Types of Returns

Consumer

Performance

Defective

Guilt

Product Use

Retailer

Defective

Slow moving

Outdated/Model Change

Discontinued

In-house Damage

Pilferage

Purpose of a Returns Program

Give retailer/distributor a tool to move product back

Identify Credit process

Manage non-selling inventory

Track product

Challenges

Accurately Identify Products

Track & issue credit

Cover costs for returns = Who pays

Product liability

Brand Image

Duplication of efforts

Business relationship – trust

Non-revenue process

Solution

Parties need to establish the following:

Communication and expectations

Credit policy

Tracking procedures

Reporting

Product flow

Product Disposition

Compensation

Communication

Both parties agree on the following:

Standardize data exchange

What and how items are to be returned for credit

Agreed upon handling procedures

Agreed upon disposition procedures

Credit Policy

Warranty versus Non-Warranty returns

Credit rate – what is the policy

Retail, Cost, Cost +, % of Sales (Cap), etc.

Physical product handling

Return, Repair/Refurbish, Liquidate, Destroy and or Recycle

Tracking Procedures

System interface

Item tracking through the process

Credit handling and disposition

Handling instructions

Disposition

Reporting

Retail Activity

Products shipped from retail location

Variance reporting from Retail location

Compliance

Consolidated Supplier charge backs

Authorized versus Un-Authorized items

Disposition/manifests

Liquidator Manifests

Product FlowA

t re

tail

lev

el •Customer brings product

back

•Quality Check item

•Return to selling space

•Defective/Warranty return to supplier for credit

•Through Distribution channel or directly to supplier

At

Dis

trib

uti

on

lev

el •Items received and

checked against –retailer/supplier returns agreement

•Qualified items for return are consolidated and Return Request filed

•Not-Qualified for supplier return are liquidated/refurbished/ recycled and or destroyed

At

Man

ufa

ctu

rer

level •Items are checked in to

validate reason for return

•Refurbished/repaired

•Liquidated

•Recycled

Product Disposition

Return to Manufact

urer

• Automatic Return Authorization

• Request Authorization

Liquidate• Bulk Sales

• Refurbish

Destroy / Recycle

• Landfill

• Recycle/Break down to parts/ Donate

Compensation

The goal is to make the consumer whole

Who takes ultimate responsibility for item

Manufacturer, Retailer, Distributor?

Ultimately costs of returns are reflected in the costs of goods.

How returns are managed can determine how much impact

they have on the overall cost model

Conclusion

“Electronic returns are like cabbage,

unlike fine wine, They don’t get any

better with age”