Returned goods can hurt productivity, reduce profitability, and damage customer and supplier relationships. No wonder most distributors focus on reducing them – but they do it the wrong way! Often, distributors try to lower the rate of returned goods primarily by tightening up policies or by finding an efficient way of disposing of the merchandise, such as through liquidators.

In a recent episode of our weekly live show, Wholesale Change, we posed a better solution for handling returns: Prevent as many returns as possible in the first place.

Don’t just “accept” returns, solve them

A return in the B2B industry has greater consequences than one in the B2C realm. If a customer returns a T-shirt to Target, it doesn’t keep her from going about her daily life. If a B2B customer returns a part for a vital piece of equipment, it could stop production and cost the company money. If that return is linked to a poor customer experience issue, that customer will be less motivated to buy from you again.

Manufacturers and distributors get tangled up in debates over who owns the return — in essence, who takes the loss. That’s missing the point. You as the distributor must own the problem if you want to reduce future returns.

Implement a process to analyze returns and identify primary causes. This will direct your efforts to reduce returns long-term.

You’ll likely find returns are more often attributed to user error than a fault with the product.

The growth in online purchasing has also likely contributed to an increase in returns for distributors, and a portion of that increase is owed to buyers not having all of the information he needs. 

Remember: Every credit memo you write represents something that went wrong for the customer. There’s no end to the benefits of getting the return process right, one of which is an overall improvement in customer experience.