Moving products back up the supply chain through returns, warranties, and repairs can eat away at your profits in sneaky ways. While certain costs related to reverse logistics show up on your P&L reports, others just appear as everyday operational costs and overhead.
It’s difficult to track the ripple effects of things like mistakes, rework, warehouse inefficiencies, and the loss of business that arises from a less-than-optimized return process. That’s why few distributors address them!
The good news is that if you approach these issues strategically, you can increase your profit margins and gain a competitive advantage in your market. We’ll help you spot the hidden costs of wholesale returns, warranties, and repairs, and we’ll offer some simple solutions requiring minimal investment.
Despite the best efforts of your staff, there’s a good chance your B2B returns process is more error-prone than it needs to be. That’s nobody’s fault—wholesale returns are complicated and have many moving parts. When there's a critical post-sales event like a return or warranty claim, chances are your team handles it fine most of the time. But even a few hiccups can erode customer trust and loyalty.
Of course, that just scratches the surface. Errors can also arise from staff turnover and lost tribal knowledge, along with the simple fact that coordinating across up to six departments and multiple organizations is challenging. Errors result in rework, which increases labor costs and distracts your staff from more important tasks.
Solution: Establishing and documenting clear processes is the first step toward reducing errors. Once you’ve done that, a returns management platform like Continuum offers a single source of truth for everything related to returns—from communication to tracking and fulfillment.
In today’s competitive climate, you can’t afford to lose a customer for any reason. According to the Harvard Business Review, the cost of acquiring a new customer is somewhere between 5 and 25 times the cost of retaining one!
Customer churn due to inefficient returns processes is difficult to track, making it a heavy (albeit hidden) price to pay for a highly preventable problem. The reality is that every customer touchpoint is an opportunity to either impress or frustrate them, and that’s especially true for returns.
Why are returns so key to the customer experience? Every return, repair, and warranty claim represents a “failure” of some kind, and each failure offers a powerful opportunity to improve customer loyalty—assuming you handle it correctly.
It’s called the Service Recovery Paradox, and mountains of data back up its claim that when companies fall short in some way, they can actually increase customer loyalty by handling things properly. Smooth, quick returns, repairs, and replacements will help you stand out among distributors in your industry.
Solution: Master reverse logistics. Implement policies, processes, and technology solutions that streamline everything. Ensure clear communication, reduce errors, and offer your customers complete visibility through tracking and updates.
Looking for ways to achieve greater transparency? Check out this Modern Distribution Management (MDM) article on optimizing visibility in distribution.
Manual processes are the norm for most customer service teams, but it doesn’t have to be that way. At a time when the most successful distributors and manufacturers are automating everything from warehouse packing to inventory control, there’s no reason to stick to the status quo when it comes to returns, repairs, and warranties.
Labor is a valuable resource, and having your staff spend time on tasks that are easily automated is a waste of resources. They could instead spend their time on account touchpoints and attending to projects that help your company grow.
Customer service teams should be selling extended warranties to your customers, not processing them!
Picture a world in which customers can log into a customer hub and enter all the information relevant to their claim—with AI technology running in the background to ensure that all the information lines up with your ERP data.
Imagine never losing vendor credits, keeping track of all correspondence, and freeing up your staff to work on tasks that add real value. That’s what a comprehensive B2B returns platform can deliver.
Solution: Use technology to automate tasks, working smarter rather than harder.
Given the complex nature of multi-party returns, communication gaps are inevitable, even with the best manual processes. Between phone calls, emails, text messages, and other methods, it’s easy for things to slip through the cracks—especially with multiple individuals and departments touching the order.
Of course, your customer doesn’t know or care how difficult it is to orchestrate supply chain returns. All they know is that their expensive return has fallen off the radar, they need a replacement part, or they're waiting on credit to be applied to their account. All they know is that your organization is to blame for making their job more difficult.
Solution: Use technology that unites all communication into one platform. It’s easy for your employees to track and follow up on, and it gives the customer greater visibility. The more you can calm their nerves, the more likely they are to remain loyal.
What is the second-order consequence of communication gaps and errors caused by manual returns processes? These issues cause breakdowns in your business’s most essential task of getting products from your warehouses to your customers.
Inefficient B2B returns pull warehouse staff and delivery teams away from their regular jobs. Delivery teams can be saddled with customer returns, altering their schedule, and creating setbacks for other customers, not to mention the inefficiencies in fuel and human resources.
Customers will sometimes send an order back when a driver delivers a product. Other times, you may be forced to rush "emergency" replacement items.
All these issues silently cut into your margins.
Poorly managed returns can also slow down day-to-day operations by taking up space in loading docks when nobody knows what to do with pallets of products that have fallen off the returns radar.
Solution: Develop clear returns processes and manage every step with intelligent technology.
Continuum is the world’s first-ever reverse logistics network, helping distributors and manufacturers automate B2B returns, repairs, and warranty claims.
We can get you up and running quickly, connecting everyone to our four separate hubs designed for customers, warehouse and delivery teams, finance departments, and anyone involved in manufacturer warranty claims.
Continuum will help you reduce manual entries, mistakes, and rework through tracking and automation. It also improves communication and overall customer satisfaction, which supports customer retention and shoring up a stronger average Customer Lifetime Value (CLV).
Book a Continuum demo today to eliminate hidden costs and boost your bottom line!