Environmental associations and politicians are calling for the so-called “duty of care for dealers” to be more firmly anchored in the law as part of the Recycling Management Act (KrWG). This includes, among other things, the ban on removing electrical and electronic equipment from the market before or after returning it to the dealer by disposing of it if it could still be used after repair or reconditioning. In the future, distributors should keep records of all returns and their whereabouts and could also be legally prosecuted if they violate corresponding specifications violated. How should suppliers and retailers implement efficient returns management?
Large companies can partially modernize their internal goods processes with the help of software solutions. However, many companies lack the resources to map all processes internally and to ensure the required transparency. You therefore decide to work with partners for returns management. But which partners are right for the company? BuyBay, specializing in solutions for returns management, has put together a checklist for important criteria that should be checked when choosing a partner.
Keep your eyes open when choosing a partner: checklist for returns management
Not only when considering whether the entire returns management can be implemented internally, but also when you have decided to work with partners, it is advisable to first take a look at the internal resources. Where are the interfaces between the internal team and the external partners? Are there enough human and time resources available to work with different partners for different areas of returns management or should one partner cover all areas? After this initial consideration, it is important to check which of the steps and services to be covered in returns management can be carried out by the partner (s).
1. How granular is the review and sorting?
If a customer sends back a product, it should be asked as soon as possible whether it was opened at all. If the item is completely new, it can be returned to the supplier and immediately added to the normal range for resale. The other returns include products with damaged or opened packaging, items that are clearly used or soiled, and non-functional products. These products can be sent directly to a return partner who records them and transfers them to the so-called “grading” process for evaluation and classification. The sorting and grading of returns ideally covers an individual check of each individual article in returns management. Can the partner do this?
2. On what basis is the profitability assessment carried out?
For the further use of the goods, an assessment is made to determine whether a repair or reconditioning is worthwhile. In the case of high-quality products, processing almost always makes sense. A reliable, data-controlled system that takes into account the expected resale value of a product and the associated restoration costs can significantly increase the profitability of returns management. It is therefore advisable to check on what basis the assessment is carried out at the partner.
3. Returns management: Which goods segments are covered?
At the latest when you look at the review of the products, the question arises as to which product segments are covered, also with regard to the price of the product. Depending on the range of goods, up to 100 different types of inspection may be required. From a simple visual inspection to the test wash cycle in a washing machine to a pixel test on 4K screens or professional data erasure for electronic and mobile devices. As with the manufacturers or sales platforms, there are return service providers who specialize in certain segments. However, if a provider has a wide range of products, this must also be taken into account when selecting partners.
4. What resources are available for testing and preparation?
The goods check should at least include a functional test, a functional description, cleaning and professional removal of all personal, identifiable information (PII) in accordance with EU data protection directives such as the GDPR. An intelligent and automated assignment of necessary tests and procedures as well as the step-by-step support of the testers through appropriate solutions can simplify the process and increase the resale value considerably. It is just as important to take detailed photos and accurately document any defects. The products may not be as good as new, but as long as the next customer has a clear idea of the condition of the product, that’s no problem either. Ideally, a partner also has the resources for the professional repair of all or at least particularly important product segments.
5. Returns management: How high is the flexibility and scalability?
Another obvious selection criterion is the size of the warehouse, test centers and repair services that the partner can provide. These must be able to cope with the expected volume of returns and ideally also cover the sale of remaining items or excess goods. It should also be considered whether the partner offers flexible solutions, such as the option to scale the quantities of goods. In addition to seasonal peaks, such as the Christmas business and the Cyberweek around “Back Friday”, retailers and manufacturers have individual demand peaks – e.g. around special promotions or holiday offers, etc.
6. How are channels and prices determined for resale?
Once the products have passed quality testing, grading and repackaging, they are ready for the next buyer. For this purpose, it should be checked which channels the returns partner uses for resale. If possible, all three common channels should be covered: public marketplaces, at least one action platform and the option of being able to sell the goods in a shop or area for B-goods on your own website.
In this context, it is advisable to check how the service provider selects the most suitable channel and whether it determines this for individual products or for entire batches. In addition, it is important to find optimal pricing for the balance between increasing value and the right sales volume. The use of an automated, data-driven and self-learning system can significantly increase the profit from these returns.
7. Returns management: Is there a customer service for resale?
Good service and the “shopping experience” are key factors for customer acquisition and retention. This also applies to the resale of returns or remaining items. Does the partner have a service team that can answer questions from buyers about the products and any defects they may have – before and after the purchase?
8. How transparent is the returns management?
Knowing what is happening with each individual product is also becoming more and more relevant in the course of the “duty of care” mentioned at the beginning as part of the Recycling Management Act. With bulk buyers, retailers have not yet had any insight into what happens to the products after they have been sold. When choosing a partner, it is therefore all the more relevant to check to what extent and in what way one can track the path of the products. This also includes what happens to defective products that can no longer be used – for example, whether they are properly disposed of or recycled. Ideally, you should always have the option to look online and see what exactly is happening with each individual product.
9. Which regions are covered by returns management?
For cost reasons as well as for environmental reasons, it is helpful if long transport routes can be avoided when working together and the returns partner has branches that are not too far away from their own location. Further advantages arise if the partner covers several regions and sells, for example, to different countries in the EU. As a seller, you can determine in which countries returns and remaining items should be offered, and price advantages can arise for buyers if, for example, they buy returns from other countries – where there is sometimes a higher price level.
10. Do the company cultures fit together and the chemistry is right
In addition to the technical, logistical and economic aspects, there are also soft factors that should not be underestimated. This includes the question of whether the ‘chemistry’ between the contact persons, but also whether the company cultures fit together. After all, the partner’s service team always represents their own brand to a certain extent. If you find similarities in handling or motivation – for example the topic of sustainability in retail, then you feel well represented by the partner.
“The checklist shows how many criteria there are to consider when it comes to returns management. But even after examining the aspects mentioned, it is only during the practical test that it becomes clear how well the cooperation works in everyday life, ”explains Oliver Lauterwein, CCO at BuyBay. “We therefore always recommend a test run – preferably with a large number of returns. In this way you can see how a potential partner deals with the goods, what prices are achieved and how well the cooperation works in general. Benchmarking against the previously used return processes is also possible in this way. “(Sg)
Also read: Re-Commerce: How the trade in remaining stock supports the trend towards sustainability