Date Added: Jan 2010
Many firms may actively discourage product returns. But this could be a costly mistake because managing product returns effectively can boost sales and profitability. Every company has an optimal rate of returns. Higher returns to a point have been shown to boost higher sales in the future. But if customers go over the optimal return rate, the costs to the company to repackage and restock the items outweigh the future benefits. Retailers can actively manage returns so that they become a tool to boost profits; they need to encourage certain customers to return more products while encouraging others to return less.