B2B returns are often complicated, inefficient, and costly—and that’s actually great news if you’re a distributor. Why? Wherever there’s inefficiency, there’s an opportunity to increase your profit margins.
The harsh reality is that most distributors have not yet optimized their return policies and processes, so if you lead the pack, you can come out on top. Optimized return policies and processes can mean reduced costs, a better buying experience, improved customer loyalty, and increased profits in one of the world’s most competitive fields.
We’ve taken a comprehensive look at the challenges distributors face with B2B returns, and we’ve identified five key steps you can take to address those issues. Keep reading to learn how you can optimize your distributor return policies and boost your bottom line.
Why Distributors Struggle with Returns
You probably already understand the logistical complexities that come with B2B returns, but that doesn’t explain why distributors have yet to optimize their processes.
In a world where we can use AI to optimize delivery routes, what’s holding the industry back from optimizing returns? Here’s why Return Materials Authorization (RMA) can be so challenging for distributors.
Limited Data. No Best Practices.
We’ve got the technology to successfully manage product returns in distribution (more on B2B returns management software below). Unlike with B2C returns, however, there is no widely established set of best practices designed to keep customers happy while protecting profits.
That’s because researchers simply haven’t studied B2B return policies the way they’ve studied B2C policies. Thanks to the mountains of data on B2C returns, successful retailers have a list of best practices they’ve put into place. Without the same volume of data for B2B returns, distributors have been forced to white-knuckle their return policies.
As a result, distributor return policies and processes vary widely among distributors, creating costly headaches for everyone involved.
We Reviewed 75 North American Distributors
Given the lack of research, we partnered with Ian Heller from Distribution Strategy Group to study the matter in detail. We cover some of the highlights of that research in this article, but we invite you to read our full report if you really want to dive in: The State of Distributor Returns.
Our first step was to study distributor return policies themselves. We looked at 75 distributors across a range of industries—from Florida to Ontario (Canada), from California to Alaska—and we found very little consistency regarding restocking fees, timeframes for returns, and many other factors.
Among the distributors we reviewed, 20 of them didn’t list their return policies on their websites, while another dozen or so posted vague and incomplete policies. Others posted severely restrictive return policies, which may contribute to lower customer satisfaction and lost business.
To be clear, we’re not recommending that you bend over backward and make your distributor return policy too lenient. It’s a question of finding the ideal balance. Carefully studying your internal returns data will help you find that middle ground.
How RMA Policies and Processes Impact Profits
Our research found that nearly 40% of B2B customers were not completely satisfied with their return experience, leaving the door wide open for competitors with better policies to win their trust.
Return processes should be smooth, efficient, and headache-free, but that’s a complicated endeavor when coordinating with different departments across multiple organizations.
That’s why reverse logistics—moving products back up the supply chain—costs companies 8-10 times what it costs them to move products down the supply chain. Inefficient processes and bad policies may be increasing your costs, frustrating your customers, and harming future sales.
The good news is that there’s a clear path to success through following these 5 steps.
5 Steps to Streamlining Returns and Boosting Profits
Since most distributor return policies and processes are far from ideal, there’s a massive opportunity here. Follow these five steps to optimize B2B returns.
Step 1: Investigate and adopt emerging technology to manage returns
Product returns in distribution are immensely complicated, but companies today have systems for managing all sorts of complex projects. It took a while for tech companies to create B2B returns management software, but the industry has finally caught up.
You can now manage the intricacies through a reverse-logistics network that connects customers, distributors, manufacturers, and finance departments through a comprehensive software platform.
The right software can reduce costs, streamline processes, and create loyal customers. On top of that, technology gives you actionable data regarding your returns.
Concerned about getting buy-in and adoption for new software? Check out this white paper from Modern Distribution Management (MDM) on how to drive adoption for new B2B technology.
Continuum is a cutting-edge platform that allows you to master reverse logistics, including returns, warranties, and repairs. Book a demo here.
Step 2: Track, evaluate, and learn from your existing returns data
Once you’ve got the technology in place, you can work to understand the real cost of returns and evaluate the ROI involved in different return policies. Again, product returns in distribution can be costly, but the right software can help you reduce those operational costs through automation and tracking.
Step 3: Identify a returns process owner and document your internal processes
B2B return process optimization requires direction and oversight. You need someone to build a plan, document all the processes involved, and understand related technology. In larger organizations, this might constitute a full-time job, while smaller distributors might integrate the role into an existing position.
Step 4: Publish straightforward return policies with clear instructions
Customer-friendly RMA processing requires straightforward, easy-to-find policies with step-by-step instructions for returning goods.
Avoid intimidating or confusing legal language. Instead, make the process as simple and painless as possible so your customers feel confident conducting business with you.
Step 5: Balance your business needs with customer satisfaction
As we mentioned above, we’re not suggesting you implement policies that work against your own interests. You still need to earn a profit, and your policies should make sense for your industry.
For example, aiming for customer-friendly RMA processing terms shouldn’t prevent a food distributor from having a 3-day return policy if that’s their approach. That makes sense when dealing with perishable goods. On the other hand, if you’re an HVAC distributor with a 3-day return policy? You might want to rethink that.
The beauty of working with the right software is that you’ll be able to evaluate the impact of different policies, balancing your business needs with your mission to deliver value and build a loyal customer base.
Streamline Returns and Boost Profits with Continuum
Continuum is the world’s first-ever reverse logistics network created for wholesale distribution. A B2B returns management software platform designed to streamline returns, warranties, and repairs, it connects your customer return requests with warehouses, vendors, manufacturers, and finance departments.
By automating and streamlining the process for everyone involved, Continuum helps you reduce costs, impress your customers, and boost your bottom line.
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