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About the Author

Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.

Logistics News

By Cliff Holste

December 12, 2012

Sales Promotions & Easy Return Policies Drive Sales Volume

Ready or Not - the Avalanche of Holiday Sales Returns Are Inevitable!

For online shopping giants like QVC, HSN, and other major retailers, business is comprised of two distinctive parts – sales and returns. They go hand-in-hand and are both important parts of the profit picture. This is especially true for businesses that depend on TV, catalog, phone, fax, and internet sales. They would not be able to sustain, let alone grow, their business without offering customers the option to return purchases.

Typically, these policies permit customers to return any item within 30 days (usually extended for holidays) for any reason for a full refund including original shipping & handling cost. To make it easier, customer friendly return labels and instructions are included with the shipment, and customer service representatives are available 24/7 to answer questions.

The rapid growth of online marketing has also impacted the returns policy of the traditional brick & mortar retail store operations. It is a fact that many consumers prefer to shop businesses that offer the best returns policy along with bargain pricing.

Deploying Cost Effective Returns Processing Methods

Industry analysts estimate that consumer goods manufacturers and distributors lose 7-13% of sales revenues handling returns each year. The challenge for these companies is to minimize returns processing and handling costs through the adoption of appropriate IS technologies along with accurate, fast, and efficient automated material handling system technologies.

Holste Says:

The rapid growth of online marketing has also impacted the returns policy of the traditional brick & mortar retail store operations. It is a fact that many consumers prefer to shop businesses that offer the best returns policy along with bargain pricing.
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The following are 3 key factors in deploying a cost effective returns capability:


  • Customer-Crediting Process: The focus is on speed and accuracy. Crediting the customer’s account after a return is made is critical to maintaining a strong customer relationship. Achieving a crediting period of 48 to 72 hours from the point of mailing the return to crediting the customer’s account is the objective. Advanced information systems must be put in place to support this short cycle time while insuring the highest possible degree of accuracy.


  • Product Quality and Control: Efficiently handling the products returned is essential for controlling costs and product quality. The goal is to maximize the value of the goods that are returned. Quickly and accurately determining the quality of goods returned, repairing damaged items, and repackaging destroyed packages are all labor intensive processes and major factors in controlling the quality of returned goods while adding to the company’s bottom line. Establishing a network of aftermarket dealers and recycling services are also critical components of maximizing the value of returned goods.


  • Applying Technology: The automated material handling systems and storage equipment utilized in the returns area must be modular, flexible and easily scalable to handle anticipated growth. Material handling equipment, controls and software systems must support the transaction volumes and quick crediting requirements. Integrating RF and voice systems provides maximum flexibility while streamlining system operations.

Effective reverse logistics management requires a broad range of operational, technical and strategic capabilities including:


• Scale and flexibility to meet changing business needs
• Industry and geographic expertise
• Visibility into the full product life cycle
• Refurbishment/distribution center management
• Web-based technologies and data integration

Final Thoughts

No doubt there are complex P&L implications in any returns logistics program. The trick is to adopt technology and a management strategy that streamlines the return, repair, and product reallocation processes. Going forward it would not be surprising to find that many companies, both large and small, simply do not have the facilities or the internal capabilities to develop and properly manage this highly specialized area of their logistics operation. For them, the best strategy may include some level of outsourcing.

Regardless of how a company chooses to practice reverse logistics, ProMat 2013 is rich with ideas. Check it out at

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