Amazon, for example, has a 30-day period where customers can return their items, no questions asked.Ī sampling of return policies from major retailers proves this: Returns are a headache for the merchant-both big and small-and no one really seems to know the best way to handle them.Home Depot, Walmart, and Target all give 90 days.Īmazon merchants, however, are free to determine their own return policies.Macy’s generally allows customers to return items with 180 days.Ikea lets customers return goods within a full year of purchase-which makes sense, because that’s about the time it takes for me to assemble one of their products.Nordstrom has no stated time limit for returns. Most of the return policies from these retailers require proof of purchase and the original packaging, and almost all of the policies have some exceptions-for example, the time frame is cut significantly shorter if you’re trying to return a diamond or a half-gallon of milk, for obvious reasons. So, let me repeat: If you’re a merchant, you know that returns are a huge pain in the neck. Sometimes you can return an item back to your suppliers. But there are occasions where you’ve just got to eat the cost. Unfortunately, it’s not just eating the cost of the product. A return requires extra time spent by your employees to handle the transaction, and sometimes it costs you an unhappy customer. A return is a loss, all around.Ĭan you avoid returns? The answer is, of course, no. We live in a world constructed by humans, so by definition there will be errors, mistakes, and poor decisions. And, of course, there will always be the guy who wants to return a half-eaten steak because…hey, why not give it a try? People will make up reasons why they don’t like a product. This is why most companies have reserves-and so should you and your small business. According to recent research, product returns account for more than 4% of global retail sales-that’s more than $642 billion every year! Which is why-if you dig deep into the financials of the major, publicly traded retailers like Walmart and Target-you’ll find that they all have a reserve for returns and it’s usually around 2 to 4% of sales, depending on their experience. This means that, for every sale, they record an expense of 2 to 4% of the sale value. When an actual return occurs, it’s charged against the already-established reserve.
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