Returning The Favor
Analyzing product returns can cut costs
By Malcolm Denniss -- Gifts and Dec, 3/1/2009 12:00:00 AM
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| Malcolm Denniss is Technical Director for SGS Consumer Testing Services |
Next to product recalls and related safety issues, one of the toy industry's biggest challenges involves product returns. It's a costly problem that is particularly acute in the toy business because of variable play habits and the vulnerability of the goods to rough use.
Returns can cause toy retailers to lose a sale, tie up their sales clerks who could be out on the floor moving more merchandise, pay staff to perform tasks like repackaging and restocking, and risk losing goodwill as well as future purchases from disgruntled customers. Manufacturers suffer parallel losses.
Dealt with properly, however, returns can provide valuable information that can help nip manufacturing problems in the bud, draw attention to potential safety issues and even shape future toy development decisions. This, in turn, can limit return-related expenses and/or increase sales over the long run. With some proactive effort, you can, in effect, turn a lemon into lemonade.
Start at the source
In some cases, excessive return rates can be traced to defects in a product's design, its components or its assembly. Detecting these problems early provides an opportunity for manufacturers to take corrective action that may save future sales.
In my experience, returns associated with defective product can be slashed as much as 70 percent through rapid intervention that leads to quality improvements in manufacturing. This may also help avoid consumer injuries or product recalls down the road.
In other cases, a high rate of return may indicate that the market is not interested in the product or that the item itself has not delivered what it promised. If this is the case, toy designers can respond accordingly.
The first step in garnering these product insights is to recognize that toy returns can serve as a kind of litmus test for manufacturing flaws, safety concerns, the toy's usability and its play value. Retailers, suppliers and manufacturers can then work together to mine data on returned merchandise for clues that may point the way to resolving these issues.
Here are four things to keep in mind:
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Track the reasons for product returns. This includes accurately capturing the information from the consumer as well as entering it in your records. There may be an easily identifiable pattern—such as wheels that fall off or motors that conk out quickly— that will help determine a course of action.
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Pay special attention to the first few returns on a new product. Usually any design or manufacturing problem with a toy shows up soon after it gets into children's hands. If so, the problem may be correctable before the next shipment goes out. Since the shelf life of a toy may be only a year or two, early detection can make the difference between the item's ultimate market success or failure.
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Alert manufacturers to returns on each item. Arrange for the manufacturer to examine returns either by sending the returned products back with an explanation of your findings or having the vendor come to your distribution center to conduct an analysis on the returned merchandise. A manufacturer's engineers are equipped to identify the cause and remedy for any defect.
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Remember that a return problem may also signal a safety problem. A broken part may be just a broken part, or it may be a choking hazard for a younger child. The earlier the problem is identified, the less danger of a serious accident or worse, and the less damage to the industry's reputation. In that sense, the retailer may be the first line of defense on safety issues once a toy has entered the supply chain.
No one likes returns, but understanding why a product is returned can curb future refunds as well as potentially protect children from harm. Those are two big incentives for putting product returns under the microscope.
We would love your feedback!
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