The best way to succeed in a competitive industry, where profit margins are tight, is to find areas where the vast majority of your competitors fall short—and develop strategies that set your business apart.
If you work in B2B distribution, you already know your industry is one of the most competitive in the world, and most inefficiencies have been eliminated. However, there’s one area where nearly everyone is struggling, and that’s B2B returns management.
B2B returns are challenging, costly, and inefficient, which means that any distributor who successfully addresses the problem can stand out, improve customer satisfaction, and increase their profit margins.
That’s why building and implementing a comprehensive B2B returns strategy is so vital. In this article, we’ll explore both the benefits of streamlining returns, along with solutions you can implement to outperform your competition.
B2B returns are incredibly complicated for a variety of reasons. First, it’s just difficult to move large orders back up the supply chain, with multiple departments involved in managing a variety of customer types and vendor return policies. However, that’s only half the equation.
Here’s the other issue. Unlike retail returns, which have been studied extensively, there isn’t a great deal of data on which policies are most effective. As a result, the industry has yet to identify a set of best practices when it comes to B2B wholesale returns.
We took it upon ourselves to conduct a review of return policies for 75 North American wholesale distributors across different industries, and we found that there was very little consistency regarding things like restocking fees, timeframes for returns, and other policies. We also found that 40% of customers aren’t fully satisfied with distributor return policies and processes, which means there’s a great deal of room for improvement.
The good news is that, with a focused initiative and the help of modern technology, you can build policies and processes that are customer-friendly and support your bottom line.
By modeling your return policies and processes after companies like Grainger and Fastenal, you can optimize returns to improve the customer experience, increase productivity, and boost profitability—which are three powerful reasons to launch your returns management initiative as soon as possible.
Let’s explore these three reasons in greater detail, along with tips for putting them into practice.
The first reason to build a strategic initiative around B2B returns is that it offers an excellent opportunity to improve the customer experience.
Everyone knows that creating a seamless customer experience is key to customer retention, but it’s easy to forget how critical returns are to making that happen. Despite the many differences between B2B and B2C returns, we can look to data in the retail space to get a sense of the role return policies and processes play in customer satisfaction.
Obviously, it would be great if we had solid customer data about B2B wholesale returns, but what we do know is that research from Happy Returns (a division of UPS that handles reverse logistics) provides a glimpse into the impact that return policies have on customer satisfaction.
How might this apply to B2B returns? If anything, the data may be understated, given what we know about B2B purchases. B2B buyers tend to be more informed and pay closer attention to the fine print since large sums of money are on the line. And of course, their job (and the very success of their company) depends on making successful purchases.
Taking on returns as a major strategic initiative will help you identify policies that customers prefer so you can double down on what works. It will also allow you to take a systematic approach to increasing the ease and efficiency associated with B2B returns—something that is greatly aided by the right technology (more on that below).
Learn more about what distributors are doing to improve the customer experience with this free report from Modern Distribution Management (MDM).
The second reason to approach B2B returns strategically is that it can significantly reduce the manual labor involved in the returns process. This can increase your staff’s productivity, allowing them to spend their time on higher-value activities and position the business for growth.
A cornerstone of a comprehensive returns policy involves taking advantage of emergent technology. Here at Continuum, we’ve created a reverse logistics network designed to help wholesale distributors handle returns and move products back up the supply chain quickly and efficiently.
It works by connecting customer return requests to warehouses, vendors, and finance departments, automating the entire process and reducing headaches for everyone involved.
The third reason to develop a strategic initiative around B2B returns is that poor policies and procedures can be incredibly costly—not just due to the productivity loss mentioned above, but due to lost vendor credits, AR customer disputes, and unresolved returns. These hiccups are inevitable when wholesalers fail to optimize their processes, resulting in costly rework.
On top of that, issues with missed vendor credits will chip away at the trust your customers have placed in you, contributing to customer churn. This is a great reminder that all these topics—customer satisfaction, efficiency, and profitability—are deeply interconnected.
Once again, using the right technology can help eliminate lost vendor credits and customer AR disputes. Continuum’s platform ensures that every vendor credit is captured and customer accounts are reconciled accurately, reducing losses and contributing directly to your bottom line.
If you’ve read this far, you’re probably convinced that you need a solid returns strategy—but where should you begin?
We’ve written a step-by-step guide to help you get started. Check out our article: 5-Steps B2B Distributors Can Take to Streamline B2B Returns and Boost Profits.
You’ll also want to download our whitepaper exploring the state of distributor product returns, where you’ll see our complete analysis of the challenges wholesalers face with B2B returns (and how you can overcome them).
The whitepaper doesn’t just provide a foundation for your initiative—it’s chock-full of data you can use to make your case to your company leaders or board of directors.
Continuum is a reverse logistics network designed for wholesale distributors. A B2B returns management platform created to optimize returns, warranties, and repairs, it allows your customers to submit requests and connects return requests with warehouses, vendors, manufacturers, and finance departments.
By automating returns, Continuum helps improve the customer experience, reduce labor costs, and boost profitability.
Book a demo today to see what Continuum can do for you.