Are Returns Making You Sweat?
Today, trying to return merchandise after a purchase is becoming more difficult and challenging. Leading the way in this change is Amazon, where the days of free returns may be ending sooner than customers want. Recently, the online mega-merchant has warned its customers that they will be hit with fees if they choose to return purchases via a UPS Store, which had been free.
According to a Forbes article from April 2023, returns are costly for both retailers and vendors. Nationwide merchandise returns in 2021 amounted to a record $761 billion.
As a vendor to retailers large and small, we are strongly recommending you monitor your returns as well. At Harvest Revenue Group (HRG) we monitor post-sales activity for many major brands. Our goal is to ensure our clients that retailers are applying fees and penalties fairly and accurately.
Returns, defects, or damaged
Let us look at this scenario as an example of what can go wrong.
You are a retailer who has just purchased $100,000 worth of dairy products for your chain of stores. The scorching heat in the area helps you sell all of the items you purchased. Congratulations! As the summer continues, you decide to restock and add a new ice cream flavor to your freezer case. You find that the new flavor, Bacon and Cream, is not selling as well as you had hoped. Traditionally, depending on the terms of your agreement, you would charge back the unsold inventory to the vendor.
Now, let us consider a different scenario. The weather continues to cooperate, and the dairy products are selling well right up to the day of the massive thunderstorms. Thankfully, there is no damage to the store, but the power is knocked out for a few days. Complicating the situation is that your dairy products now have gone bad. Once again, you as the store owner, should ideally contact your insurance agent and file a claim for the lost and damaged product.
Unfortunately, HRG has seen evidence that this is not happening. Instead of dealing with the paperwork and hassle of filing an insurance claim, some retailers, whether intentionally or not, have charged back the loss to the vendor by classifying the loss as “defective merchandise”. This means the cost of the product is charged back to the supplier as if it was received by the retailer in unsaleable condition. Remember, that is not what happened. To be clear, this type of mistake does not happen frequently. Nevertheless, it is important to keep a close eye on the rate of returns, defective merchandise, and discounted items as part of your audit process. Rarely is it a single, major error. It is often a series of small errors and adjustments that add up over time.
How HRG Can Help
HRG has the bandwidth and data-management skills to look for these small but significant changes over a long period. Harvest Revenue Group (HRG) has the expertise and technology to catch those incorrect charges and fines. More importantly, we make it easy to recover your money so you can put it back to work for you.
To find out more about HRG, please contact sales@hrg-audit.com or check our company's website HRG-Audit.com.
