Aftermarket Business World columnist Larry Silvey takes a close look at the age-old problem of product returns in the automotive aftermarket in his column, “How the aftermarket deals with returns.” He cites an Automotive Aftermarket Suppliers Association (AASA) survey of North American parts suppliers that says an average warranty return rate is three percent of their annual sales. That computes to a staggering $3.5 billion credited by manufacturers each year.
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Processing returns is time consuming, labor-intensive and perplexing, especially if shops damage the parts or the packaging. Determining why a part was returned is very difficult for a manufacturer or reseller to know. Is the part defective, was it installed correctly and what about the technician’s skill? Should they accept returned parts if they are not in their original condition? What about technicians who order two identical parts, install the one that arrives first and return the second part in an unopened box?
Whether a returned part is fair or not, most manufacturers and resellers will cover the cost. Many see returns as a cost of doing business and build that cost into their budgets. They also fear losing business to those who are covering the costs of returns.
Silvey suggests ways that manufacturers can more efficiently handle returns by making them a part of their core competency or by hiring third-party logistics (3PL) companies to handle them. Click here to read the entire column.
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