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Chapter 19: Handling Product Returns

Despite the best intentions of you, your customer, your distributor and their shipping carrier, you will occasionally have to deal with product returns.

Any Store you open on the Internet should contain an Info page. Any Auction you run should contain an Info section. It should contain your contact information, your shipping policies, your Privacy policy (what you do with the information you gather about your customers), your Return policy, etc. Your customer needs to know these things, and if they don't see them on your site or Auction, they're not going to trust you. You need to outline at least a basic return policy up front. If you'd like to see an example of one of our Info pages, check out our Internet store at www.ElectronicDartShop.com, and click on the Info link along the bottom of the page.

Let's go over the main reasons for product returns, and what you should do about them.

1.) Factory Damage

Once in a while, a customer will buy a product from you, only to discover that it is defective. This happens whether your store is on the Internet, or in a quaint little brownstone building on the corner of Main and Maple streets.

When a product has a factory defect or damage, it is your Supplier's responsibility. However, YOU need to be the one to help your customer resolve the situation. Here's how it works:

Your customer buys a product from you, and it arrives broken or somehow defective.

Your customer emails you, and asks what they should do about it.

If you are using Drop Ship Suppliers:

The first thing to have your customer do is check any instruction manual that came with the product you sold them. They need to see if there is a Manufacturer's Customer Service contact there. If so, they should try to contact the Manufacturer's Customer Service for a Warranty Replacement. Most new brand name products are under Factory Warranty, and the Manufacturer in most cases can replace a damaged product faster than you can.

If that doesn't work, you contact your Drop Ship Supplier, tell them that order number "XXXX" was a defective product. Ask them for an RMA number (Return Merchandise Authorization). Then ask them to set up a UPS Call Tag. This means that they need to send UPS to pick up the item and return it to the distributor, at no shipping cost to you or the customer.

You email the customer back, and give them the RMA number. Ask them to write it on the original box that the product came in. Tell them that UPS will pick up the defective product.

Depending on how your Drop Ship Supplier works, they will either send a replacement out immediately (at no shipping cost to you or the customer) or they will send one out when the broken one is returned. Both methods are valid.

That's it; new product, happy customer, no cost to you or your customer.

If you are Stocking Products Yourself:

Again, the first thing to do if you are the one stocking products in your home, is to ask the customer to contact the Manufacturer's Customer Service.

If that doesn't work, then you are the one responsible for replacing the product. You need to send a UPS Call Tag (that means have UPS pick up the damaged product from the customer) and you need to ship the customer a new product.

You are going to lose a bit of money on this situation; namely the shipping cost to have the product picked up, and the cost of shipping the new one to the customer. However, your profit should easily cover that amount, so it's actually more of a "wash", not a loss. You should at least break even.

It's best not to ship the replacement product out until after you get the damaged one back. Sometimes when the customer gets a new product first, they won't bother to put the old one out for UPS, and you need that old product. That's because you are going to ask your Bulk Wholesaler to credit you for that damaged one, so you don't lose out on the product price as well.

Over time, you may build up a very small collection of damaged products that have been returned to you. After a while, ask your Bulk Wholesaler to send a UPS Call Tag to you, to pick them up and return them to the Bulk Wholesaler.

That's it; new product, happy customer, not much profit on your part, but there should not be a loss.

2.) Shipping Damage

Very rarely, a product will be damaged in shipping. If this happens, the customer will email you and tell you so. Whether you use Drop Shippers, or you stock products yourself, You need to tell the customer to call the shipper (UPS, FedEx, USPS, etc.) and notify THEM. They all have 800 numbers for this purpose, and you should have them available. As I said, this is very rare, in fact it has NEVER happened to us. However, in this situation, the customer contacts the shipper, and follows their instructions for rectifying the situation. If you want to provide some really excellent customer service, get the information from the customer, and place the call yourself.

3.) "This Hair Dryer just does NOT match my bathroom wallpaper!"

Sigh! Yes, they're out there. Picky people, fussy people, or people who just didn't choose the right product for their needs. You need to have a return policy for these dissatisfied customers as well, although you need to make sure you don't lose any money on the return. Here's how we do it on our retail sites: we offer to refund any purchase within 10 days of customer receipt for any reason, MINUS return shipping and a 15% restocking fee.

So, your customer contacts you, and wants to return a product.

If you are using Drop Ship Suppliers:

As long as it's within your return policy period that you have posted on your Internet Store or Auction, you contact your Drop Ship Supplier and obtain an RMA (Return Merchandise Authorization) number. Your distributor will have no problem with this, as long as it's within THEIR return period, which is usually 30 days.

You inform the customer that they should write the RMA number on the outside of the original box. They must pack the product in the original box, with all it's manuals, accessories, and original packing materials.

The customer then needs to send the product back to your DISTRIBUTOR, not you. Provide them with the distributor's return address. Many distributors keep blind PO addresses for just this purpose, so that your customer never knows where the product really came from. The CUSTOMER must pay for return shipping.

When the distributor informs you that the item has been returned in the proper condition, you then refund your customer's credit card their full purchase price MINUS your 10% restocking fee. Your restocking fee may vary, but you need to do it, because your distributor is going to charge YOU a restocking fee. As I said, you have to do this in such a way that you don't lose any money.

If you are Stocking Products Yourself:

In this case, you can simply tell your customer to ship the product back to you, in original packaging with all original materials, within your Return Policy's time period. The customer must pay for the shipping, and you charge a restocking fee for your inconvenience.

If the product does not arrive in a condition that allows you to re-sell it, you can refuse the refund and ship the product back to the customer again, but that's extremely rare. Just make sure you don't refund the customer before you get the product back in good condition!

Those are the basics; the main reasons you may have to deal with a product return. It does not happen often, but it's best to be prepared.

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