Wholesale: Is the Web a saving grace?
Jeff Neely, president of C.J. Parts Distributors Inc. in Trenton, N.J., says about seven years ago, his return rate was below 15 percent. Since then, it's crept into the low 20s. His task now is to get it back down, and he has a plan.
"First, we try to encourage counterpeople not to take the path of least resistance. Instead, try to narrow what the customer's wants are from the start, instead of multiple applications that they can return later," he says. "Second, for about the last 18 months, we've been pushing our online ordering."
Neely says he's noticed that when customers are putting information onto the website, they tend to be more careful. By contrast, it's an easy mistake, for example, to say "1992" instead of "1982" on the phone, only to get an incorrect part delivered.
The best part, Neely admits, is that those who are going online are not only returning less, but spending more: "It seems to forge a tighter business-to-business relationship with us. We've seen more than a few customers who used to call for about $500 a month now ordering about $2,500 worth of parts monthly online from us."
Computers in general offer another advantage: the ability to flag repeat offenders in purchasing reports. For example, Neely notes that many multi-bay garages had high rates in the past simply because of duplicate ordering (the tech and the manager each calls it in, for example). By requesting one point person responsible for ordering, the return rate is on the decline.
Plan of attack
Jack Malloy, business development manager for APW Knox-Seeman in Carson, Calif., says he hopes to increase Web business, but in the meantime, his team has several stringent return policies in place.
"First off, we never take it back unless it was purchased from us, and we only allow 30 days on returns," he says. "It's also important to us whether the merchandise is saleable. If the box is dirty, back it goes."
In addition, APW Knox-Seeman allows only a certain return percentage per customer. The range is from 5 percent to 20 percent, depending on the size and volume of the account. Regardless, if they exceed their monthly allowance, they get a bill for 10 percent of the overage.
National Automotive in Fort Wayne, Ind., also sets forth several strict policies. Besides a 30-day limit, merchandise is subject to a 15-percent restock charge. ("This alone can be a deterrent," notes General Manager Tony Kell.)
There is a 50-percent deposit for all special orders, to guard against no-shows, and special orders cannot be returned. Kell says the latter sometimes varies according to the circumstances, but it's important to have a policy to rely on nonetheless.
In addition, National refuses returns on electrical, ignition, ECMs or emission control unless it is determined that the company, in fact, sent the wrong item in error; also, Fel-Pro is non-returnable if opened.
Returns also cannot be picked up by National's drivers without a two-part pickup slip that is written up at the store: "This allows us to police what is being returned and its eligibility for return; keeps merchandise from magically appearing or disappearing from delivery vehicles; gives the customer a tracking method for credit; and removes the driver from the position of authorizing returns," Kell explains.
With all this in place, Kell estimates his company hovers at a 9-percent to 10-percent return rate. Although he realizes it's below industry norms, "Even this amount is frustrating for us. How can you have 10 to 25 percent of your inventory in flux?"
Staying vigilant
Hank Bejian, owner of NAPA Auto Parts in Ann Arbor, Mich., counts himself lucky to have less than a 7.5-percent return rate for his return-to-stock merchandise. But he knows it didn't just fall into his lap. While he chalks some things up to happenstance, he is proactive with repeat returners.
"We invested a lot of money into an electrical tester. To me, there's no such thing as two 'defectives' in a row," he says, adding that once customers know his store is going to put the part through its paces, they tend to keep returns down.
Bejian notes, however, that he does not mind giving more than needed and taking back the rest, where warranted. "I do a lot of national account business. I close at 5:30 but their garages might stay open until 7. I offer a multiple choice — take what you need, I'll take back the rest," he explains. "I put myself in their position. It's 6 p.m., they're hot, they're tired — 'Couldn't you have just sent both of them?' Well, I do."
Malloy is worried about the increasing tendency of some technicians to "diagnose through trial and error" because, as vehicles become more complex, the number of parts that might get tried and returned will likely also increase.
"If the guy gets three parts and sends back two, they shrug it off and say, 'Your competitor will do it.' Well, let our competitor do it," he concludes, adding that parts prices will rise in reaction to the extra processes of giving out credit for defectives, for example. "I feel the industry must react to this situation. Those in business have to adhere by business rules — or they're gone."
Retail: Ask the extra questions
While many of our respondents for the returns issue were more heavily wholesale, they all agree that retail returns come with additional headaches.
For example, Hank Bejian, owner of NAPA Auto Parts in Ann Arbor, Mich., estimates that just 8 percent of his clients are DIYers. Still, he displays many signs around the store and the one he counts as most important hangs right in the front window: "No returns of electrical parts."
His reasoning is that too many consumers (and, for that matter, technicians) use electrical parts as a kind of diagnostic tool.
"A guy bought a starter for his Ford truck, then called me to see if he could return it because he thought the problem really was the relay," Bejian recalls. "I said 'No sir, once it's put on, it's yours. We can't tell if there was an electrical surge when you put it on, or you dropped it on the ground before it was put on.'"
Bejian was certain the customer would be agitated, but to his surprise, the man understood and came in to the store for the relay. But he notes that the red flags continue to pop up, right at the register.
"If someone is purchasing an electrical tool and says, 'I'm not really sure about this,' we tell them, 'Well, there's a good shop down the street and for $49.50 they might be able to tell whether it's just a loose wire,'" he says, adding the best way to handle returns — or potential returns — is to stay in control, be helpful and honest, and find out as much as you can up front.
Bill McClure, a hands-on industry veteran who just opened the 9,000-sq.-foot Auto Parts & Supply Co. in Piedmont, Ala., in August, echoes the sentiment.
"Our product return rate in every store I've owned has been less than 10 percent," he says, noting the Piedmont store is his fourth independent venture. "Our last location was closer to 5 percent. The key is asking questions and turning away a few customers, but making friends in the process."
McClure trains his team to ask and answer questions honestly, doing their best to "politely educate" their customers.
"When someone walks in the door with a part that he or she wishes to return, we make the refund without any hassles. It's just good business," he says. "But it's better business to keep it from ever happening to begin with, and that keeps our return rate to a minimum."
Code reader complications
McClure says one big source of unnecessary retail returns stems from customers coming in from competing stores that do "on-board diagnostics in the parking lots."
"Code readers are great for sending a good technician in the right direction, but we all should know that a code for a bad O
"There are also many reasons to tell the customer who comes in looking for plugs for his three-year-old car with 30,000 miles on it that he really shouldn't change those plugs just yet, and to advise our O
Upselling works
McClure notes that sometimes selling more up front avoids an unhappy return customer who didn't completely solve a problem. For example:
- Fuel pumps: Make sure that a new sock and filter go home with them, too.
- Timing belt: Recommend replacing the water pump, and suggest looking at a timing belt component kit.
- Oil: Ask customers if they would like you to look up the factory recommended specification. ("It's amazing how many folks are putting 20W50 in cars that are designed to run on 5W30," he quips.)
