By Todd Ramsey
For so many 12-volt specialist retailers, getting it right with the customer on the first job is key to establishing the perception that they are experts, particularly when they have already closed deals and customers are anxiously waiting on the installation of whatever it is they’ve purchased. Although much of the challenge to getting all the elements right is within the control of the retailer, there are always a few things retailers and installers consider wild card elements. One of these is product failure and the process and hidden costs to get it taken care of.
Here’s the scenario: Small retailer special orders an item or sells something they don’t regularly stock more than one of. Installer puts the item in (perhaps as part of several things being installed) and discovers a failed product out of the box. They retrace some steps to try to gather information that may accompany a tech support call and, ultimately, taking care of this problem requires the retailer to order a replacement part.
There are several things the retailer must consider now. First, the cash flow of purchasing the second item (for those not on terms with a vendor). Second, the time it takes to deliver the new product. Third, inconveniencing the client due to the extra time required to make things right and schedule installation of the replacement part. Fourth, the cost of sending back the defective part to the manufacturer and what happens to that before it becomes credited or returned (repaired or replaced), ready to sell.
Although the manufacturer or supplier can’t always control the impacts of the first, second or third items directly, many could actually create policies or programs that help with that fourth issue — the costs of shipping returned items that, in principle, are not the retailer’s fault.
In discussions with several small 12-volt retailers who have tried to streamline their inventory to smaller levels and turn it more frequently, not to mention that it’s impossible for them to hold every single application specific part in inventory anyway, many feel that the manufacturer should bear some responsibility for the cost of returning items that are defective out of the box.
Surely with the volume of a manufacturer’s product shipments, it would be much less costly for them to send a call tag for an item to be returned and then, if upon testing and inspection the product is found to be defective, the manufacturer would absorb that cost. If the manufacturer finds the retailer is at fault, then at least if the retailer were charged it would be at a much lower rate than the manufacturer pays for shipping costs versus the “retail” rates that retailers usually pay through UPS, FedEx, etc.
Considering that margins on many products are thinner than they have been, but also adding any costs to reschedule or accommodate clients because of unforeseen product failure that extends the amount of time required for product installation (or necessitates a subsequent visit), the retailer bears a cost anyway. Such a return shipping amnesty program could create more loyalty among retailers who are looking for more of a partnership with a supplier, and it would certainly give customers greater confidence that the retailers they buy from can take care of any problems that arise.
Of course there are opportunities for manufacturers in such a program. They could either leverage the returns data to track some unknown manufacturing issues contributing to failures or, if the problem was due to an installation error, they’d quickly have a short list of training topics to get out there and spread to their retailer dealer base. If there are no faults found on a returned product, the retailer would pay anyway — but they could have a vendor profile that their sales or support rep can leverage to provide input on where the retailers can improve to avoid those issues in the future. Either way, whether it’s the ultimate fault of the product (manufacturing defect or damage in transit) or from the retailer (due to installation errors), there’s an opportunity here to deal with it in a way that limits the burden on retailers when it’s not their fault and to use it as a focused customer support opportunity when faulty product installations are the fault of retailers.
What do you retailers think? Would you like to see your key vendors help you mitigate the damage control of the “surprise” product failure when it requires otherwise costly return shipping on your end? How are you handling it now? Please comment here on our blog and let us know!
Print | posted on Thursday, April 08, 2010 3:50 PM