By Lee Smith, P.log, B.M., CEO of LSL holding Company.
I was very surprised to to visit a client a few years back to find out that they were experiencing a 20% return rate of goods that they sold on the internet. With some effort we were able to reduce the return rate to a more manageable 6%. The difference of 14%, was the difference between making a profit and losing money on the eCommerce part of the business.
This shows the importance of returns on the bottom line of any business, but it becomes even more complicated when crossing the border is introduced into the mix. If you have been following my series of blogs (click on this link to my blog site) on Non-Resident importer status and Carrier Low value shipment Clearance, now you are ready to look a the options for returns from Canada.
Return options
- Reship: Have the customer keep the item and just reship a new one. If that items is less than $20, you are better off just shipping a new one if you do not have a consolidation point in Canada.
- Consolidation: Have all items return to a consolidation point in Canada. This is a great option if you have the volume or if your items are valuable and you want to make it simple for your customer.
- Triage: As an option of consolidation some suppliers will offer triaging. Great way to identify bricks (items of no value, but costly to return) and having them stay in Canada instead of paying for crossing the border.
- Consolidated shipment: The supplier in Canada will hold the items until there is enough volume to ship back to your location (that level can be decided on upfront)
- Destroy: The Canadian supplier can provide destruction with various level of certificate. No point in bring the items all the way back to your location in order to destroy them.
- Liquidation: This is another option that saves the items have to be returned to your location, and generates some revenue for your company in Canada.
- Fulfillment: If the item is still sellable, this provides an option to reship it to another Canadian consumer. Reduce your cost from your location.
- Customer generated return: This is where the consumer returns the items to your location at their expense. This is one that where it is very important to work with the customer to ensure that the item is identified as a returned item as this has taxes and duties implication for your company. It is also important to make it clear to the client, that they will have to apply with the carrier to get their duties and taxes back on a return item. E-14 forms for Mail services, B-15 Forms for Courier services.
Checklist of questions for building your returns and exchange program.
What is the volume that you expect?
What is the percentage of returns that you currently experiencing?
How important is it for you to have the items returned to you?
Can you delay the returns of these items if it will save you money by consolidating?
How easy do you wish to make it for your customers?
Once you can answer these questions you will be well on your way towards creating a return policy and program that meets your needs and he needs of your customers.
Disclaimer: There are many options that should be considered before deciding on the best method for clearing the border for your customers. It is best to review with a professional before making any major decision on your supply chain.
Lee Smith is the CEO of LSL Holding Company, a leader in the Supply Chain selection and Courier optimization consulting. Whether you are new to the Canadian Market or looking for ways to improve your existing supply chain to Canada they can help.
lee@lslholdingco.com
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