Consumer Returns Conference 2008 Presentation

Consumer Returns 2008 Creating and Implementing an effective disposition strategy to reduce the costs associated with Reverse Logistics and enhance asset recovery Ric Spicer, Manager Reverse Logistics and Recycling Wednesday, October 29, 2008

Discussion Topics
Scope of Consumer Electronics Returns
Reverse Logistics @ Circuit City
Creating a disposition system to determine whether a product is:
Returned to Vendor
Refurbished and resold in the store
Remarketed through alternative channels
Recycled
Building awareness of vendor master agreements into your disposition systems, to ensure all valid items are returned to vendor
Configuring your diagnostics and disposition systems to deal with outstanding product and brand variety

$11.0 Billion in CE Product returns and Exchanges in 2008
25% result in cash reimbursement, credit card reimbursement or store credit
39% made a similar purchase at a different store
Cost to Industry: $1.4 Billion

Two year rate of returns continues to decline
27% in 2004-05, 23% in 2007-08
Overall return rate for the past 12 months is 27% (including Accessories)
Loyalty to brands or retailers not adversely affected by product returns

Top 3 Reasons for Returns:
Did not work as thought: 34%
It broke while I was using it: 31%
It did not work out of the box: 24%
Least cited reasons for returns:
Found a better deal: 6%
No longer wanted: 10%

When making their return:
69% of consumers received an exchange
42% got the same brand and model
14% got the same brand but a different model
13% got a different brand and different model
14% got a refund
3% took a store credit

In order to reduce returns, Guests would like to see:
Better in-store displays (21%)
Receive better information from the Sales Associate

Reverse Logistics @ Circuit City: Guest & Vendor Service
Begins when our Guest enters the store with a return…
…ends with reconciliation between Vendor and Merchandise Payables
And EVERYTHING in between!

Reverse Logistics @ Circuit City: Scope
Management of:
Return to Vendor/Risk Recall/Liquidation Physical & Electronic locations
Distressed Inventory
AS/400 Product Disposition Information
Returns Management Reporting
Consumer Electronics Recycling
Rechargeable Battery and Cell Phone Recycling

Reverse Logistics @ Circuit City: Cross Functionality
Vendor Relations
Merchandise Payables
Logistics
Distribution
Inventory Accounting
Inventory Management
Executive
FP&A
Home Delivery
Advertising
IT
Store Directors
guest Service Associates
Product Flow Team
Operations Managers
Internal Audit
DMG
Merchandising
Store Operations
Firedog
Asset Protection
Business Development
CC Direct
Corporate Communications
Service
The City
The Source
Training
RVPs/ROMs/DOMs

Return to Vendor
Within your Returns Policy Guidelines?
14 or 30 days
Within Vendor Agreement Guidelines?
Received from vendor within 6, 12, 18 months?
Damaged upon Delivery?
Open the box in front of the guest?
Abused Product?
Obvious visible damage at point of return
Missing parts?
Reason for return?
Why is it always “not working” or “broken”?

Refurbished and resold in the store
Engage guest at time of return
Is guest Service Associate or Technician responsible?
Inspect product after return
Training is critical
SOPs help create consistency
Eliminate costs of transportation and handling at Product Return Centers
Product available for sale…
Unopened product
Return to shelf immediately

Remarketed through alternative channels
Open market web sales
Contracted third party vendors
Bulk sales of mixed products
Eaches sales eBay style
Selected large quantities of single SKUs
Contract through limited buying groups capable of quick and reliable funding

Recycled
Handled in parallel to Consumer Returns
Challenges:
Guest services
Warehousing & Logistics
Transportation
Consolidation
Responsible Reuse/Recycling/Destruction

Product Receipt
– Induction of inventory at Distribution Center
Where is it?
How Much do we have?
When did we last receive it?
Starts Returns Timeclock
SiRas implementation
Guest Purchase
Capture information at Point of Sale
Guest Return
Capture information at the Point of Return
Condition of product
Eligible for return? Replacement? Service? Warranty?
Accessories included? Charges for missing accessories?

Returns Destination
– Maintenance of the RTV system in the AS/400. These screens feed to all POS systems and provides Store Associates with disposition for Guest returns – Return to Vendor (RTV), Service or Liquidation.
Return Authorization Management
– Request and follow up on aging RA requests on behalf of the PRC’s to ensure returns move as quickly as possible.
Vendor Receipt Discrepancy Management
In-Transit Damages
Over/Short
Pricing Discrepancy
Eligibility discrepancy

Centralized Management
Vendor relations management
Data management
Data Management Group
Reverse Logistics
Cross Functional communication
Changes communicated to Reverse Logistics for update

Web/Direct Purchases
Can be returned to Circuit City stores
Not available for Open Box sale
Process through normal Reverse Logistics channels

Consumer Returns 2008 Creating and Implementing an effective disposition strategy to reduce the costs associated with Reverse Logistics and enhance asset recovery Questions??

Consumer Returns Conference 2008 Presentation

by Ric Spicer on Feb 06, 2009

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Consumer Returns Conference 2008 Presentation — Presentation Transcript