Returns can present unique challenges for consumer-packaged goods (CPG) brands compared to other types of businesses. CPG goods are often more perishable, have less resilient packaging, and aren’t easily resold when returned. This makes returned items a big part of revenue loss for many CPG brands.
Historically CPG businesses rely on retailers to sell their products—those retailers also handle returns and absorb the cost of non-re-sellable goods. More and more, digitally native brands are moving to a direct-to-consumer model—these DTC brands selling CPG products are at an even higher level of challenge to process customer returns efficiently.
One of the best things any ecommerce brands can do is to communicate clearly with their customers, to reduce returns overall. Here are some of the best ways CPG companies can efficiently process returns, so they don’t lose money on lost inventory.
Steps to Efficiently Handle Returned Merchandise as a CPG Company
Establish a returns policy
Develop a clear and comprehensive returns policy that outlines the acceptable reasons for returns, return timeframes, and any specific requirements or limitations. Communicate this policy to retailers, distributors, and customers to ensure everyone is aware of the guidelines.
Partner with retailers and distributors
Collaborate closely with your retail partners and distributors to establish a streamlined returns process. Understand their return requirements, systems, and timelines. Maintain open lines of communication to promptly address any issues or concerns that may arise.
Track and monitor returns
Implement a robust returns tracking system to capture information about returned merchandise. This includes details such as the reason for return, date received, product condition, and any relevant supporting documentation. Tracking returns allows you to monitor trends, identify patterns, and make informed decisions.
Determine disposition options
Assess the condition of returned merchandise and determine the appropriate disposition options. This can include restocking, refurbishing, repackaging, liquidation, or disposal. Evaluate the feasibility, cost-effectiveness, and market demand for each option to maximize recovery and minimize losses.
Reverse logistics management
Establish efficient reverse logistics processes to handle the physical flow of returned merchandise. This includes coordinating pickups, managing transportation, and ensuring proper documentation throughout the return journey. Aim for cost-effective and timely logistics to reduce turnaround time and optimize operational efficiency.
Product evaluation and quality control
Conduct thorough inspections and quality checks on returned merchandise to assess its condition and eligibility for resale. Implement standardized evaluation criteria and guidelines to ensure consistent decision-making. Identify and categorize items based on their suitability for different disposition options.
Restocking and inventory management
For returned merchandise deemed suitable for restocking, integrate it back into your inventory management system. Ensure proper tracking, tagging, and categorization to maintain accurate stock levels. This allows you to maximize the usability of returned items and minimize the impact on overall inventory management.
Data analysis and process improvement
Continuously analyze return data to identify trends, patterns, and areas for improvement. Look for recurring issues, such as common reasons for returns or product defects, and take proactive measures to address them. Use data insights to refine product development, packaging, and customer support processes.
Customer feedback and support
Maintain open channels for customer feedback and provide excellent customer support throughout the returns process. Promptly address customer concerns and provide clear instructions on return procedures. Actively seek feedback on the return experience to identify opportunities for improvement and enhance customer satisfaction.
Best Returns Policy for a CPG Brand to Not Lose Money on Disposed Items
The specific returns policy for your CPG brand should be tailored to your unique circumstances and customer base. It’s essential to balance customer experience with minimizing losses to create a policy that works best for your brand.
The best line of defense against product loss due to returned merchandise is establishing very clear eligibility criteria for customer returns. If your customers know the clearly defined conditions under which returns are accepted, before they purchase, you’ll ensure more commitment from buyers. Consider specifications like products are unopened, unused, and non-damaged. This will give you more re-sellable items in your RMA (return merchandise authorization) process.
Other returns policies you may want to consider:
- Time-limited return window
- Require proof of purchase
- Add a restocking fee to offset the cost of inspecting, restocking, and reselling returned products.
- Return authorization process, where customers must request approval before product returns.
- Provide better product descriptions (especially for online retailers) to prevent returns.
While returns pose a particularly difficult challenge for many CPG companies, with a proactive approach to their returns management process they can still efficiently manage this arm of their business—returned merchandise, optimize recovery, and minimize losses.
If you are looking for returns support, DCL Logistics has an excellent track record of supporting high-growth brands get products back into “good stock” quickly and efficiently. We have a robust returns tracking system (ReturnTrak) to help ensure you aren’t losing money on this very important aspect of your ecommerce business. Reach out to get a quote.