Series 2 - Episode 8 - How To Avoid Returns in Q4

Speaker A: Foreign welcome to the E Commerce Made simple podcast. I'm Jerome De Guignier, your host and in this episode today I'm happy to welcome Rachel Go from my FBA prep to talk about returns. Now, what, what it means, what's the impact of returns, but also how you can prevent having uh, and getting returns. Why is it so important? Is as a seller ourselves, we have seller accounts in different parts of the world and Amazon seller accounts, but also on other marketplaces is that returns can be the only reasons which make you successful or unsuccessful, which can help you make money, but also help you lose money or uh. So understanding how to avoid that is critical. We have so many fun stories which we share during that uh, podcast about things like how people make returns. Like funny returns. They replace the product with another one to get, you know, the best solution, like earbuds or earpods. They will replace and put cheap ones and send you back the cheap ones. Or uh, they cream a beauty cream where they take half of the pot of the cream out and they send it back to you. Things like that. It happens a lot when you sell and the more you sell, the more uh, you get of that. So for us it's so, so important to be on top of it, understand your customer, understand what happens and, and sometimes be creative, be funny about it and, and still keeping in mind the customer but also keeping your bottom line in mind. So I hope you'll enjoy that uh, podcast and uh, yeah, enjoy. Have fun. Amazing. So welcome everyone to this new E Commerce Made simple, uh, webinar. I'm uh, super excited to be here today with Rachel and talking about um, one very important topic which is red returns, specifically in Q4 and optimizing the reverse logistics. So talking about the problem and why it happens and finding solutions about how to limit uh, that and limit the cost, linked um, to that. So without more introduction, I'd like to uh, give the space to Rachel to tell, tell us a bit about yourself and the company. My FBA Prep, of course.

Speaker B: Thank you Jerome. And thank you everyone for making time today. So as Jerome mentioned, my name is Rachel, the marketing director for my FBA prep and I have about a dozen years in B2B commerce behind me at this point. So I've an all logistics focused. So I've seen quite a bit of it over uh, the last couple of years. My FBA prep is a, uh, it's a global, um, essentially warehouse network with uh, a special expertise in FBA prep. And so what I hear so often in our client conversations and our client interviews is that they really appreciate how we customize our services because the larger you get, the less you fit in a box, so to say. And so my FBA Prep is just a very customized, um, provider or partner for your logistics needs. FBA prep, D2C and all of that good stuff.

Speaker A: Okay, and where, where, where you located? And where's my FBA Prep located in the world?

Speaker B: My FBA Prep's headquarters are in Florida, but we have warehouses all around the U.S. um, and so, you know, whether you're, you want to use any port or any, you know, manufacturer across the US or wherever your consumers are located or concentrated, will, will have something near you. They're also located in um, Germany, the U.K. you know, all over the place. So really anywhere you need.

Speaker A: Great. That, that's a great, uh, thing. So today we're going to talk about, uh, the, the different aspects of, of uh, handling the returns. And like I say, the, the first part of the discussion will be really focused on, um, you know, what, what are returns, what, what happens, what's the cost of returns, all those things, why they happen. And the second part will be, okay, how can we uh, like anticipate and, and try to reduce those, those uh, risks? It's still early stage, although a lot of shipments probably have been done for, for Prime Day and Cyber Monday. But still some things can be done Christmas a bit later on. So just, just to get started, um, what is, why is it so important? What's the impact of returns? Uh, like why, why are we even doing that webinar? Right? And why people should, should spend, uh, time on that.

Speaker B: So in e Commerce, returns are a necessary evil. No one really likes them. Um, but you need to provide them because they're important for your bottom line. They affect your conversions, your customers want them. Um, a huge percentage of consumers will not shop with a, ah, brand or retailer if they don't have a good return policy or following a bad return experience. And also your competitors are offering them to your customers. So if you want to keep your customers loyal, you kind of have to have what is the necessary evil of returns.

Speaker A: Yeah. And as a consumer, you love the idea of being able to return the goods, right? So like you have to step, you have to change hats sometimes like as, as a brand or the supplier and sometimes as, as the end consumer. And um, why like, um, like why is Q4 the one place where you say that okay, returns is specifically important is that just because, uh, the volume of sales are ah, bigger, therefore the returns are bigger like is there something specific with Q4?

Speaker B: So for a lot of brands, Q4 can make or break your business for the entire year. So much sales happen in Q4 from Black Friday to Cyber Monday, the big five, all the way to the holidays, the gift giving and everything. And so at first when you're in Q4, it can look really positive for your revenue. But then when you hit January, if you haven't prepared, educated your customers, gotten your reverse logistics ready, sometimes those returns can come back in and they can really affect your business negatively because that's inventory that you may no longer be able to sell. It's inventory that you were not able to sell in Q4 because someone else had it. And then, you know, with possibly the plan to return it or um, you know, potentially Safra does happen in return. So you want to like prevent that. And that's what we'll go over later on in the, in this chat, I assume. Um, but essentially in January, if you haven't prepared during Q4, your bottom line is going to take a hit and your inventory levels and your customer experience.

Speaker A: So it's a, it's a mix of bottom line, which is why you're doing business, is making profits and then like customer trust and, and long term sales, let's say long term value of, of what you want to do with, with your customers. And um, when we were preparing, we discussed that, okay, there's um, uh, like how this whole thing of returns happens, like describing the process to understand it. And there's two main, different pillars, right. One is when you're doing dtc, so you're selling directly to customers. In the Amazon world, we call it fulfilled by merchant. And there's the other part which when Amazon is doing the FBA part, so fulfilled by Amazon. So Amazon is talking warehousing and selling the product. So can you break down that for us? Like in each case one and case two, what, how does the return happen and what is the impact of one and the other and what are some, you know, learnings from both sides?

Speaker B: Sure. So a lot of sellers have already gone through the returns process. So I'll just touch on a couple of key points, um, between the two different, um, you know, methods sales channels I would say. So let's start with fba. Let's go with an FBA seller. When you sell through fba, Amazon actually handles customer service and return logistics. Um, in most cases if something is returned or a return is requested by a customer, Amazon will automatically refund that customer. Um, and usually the costs are the seller's responsibility. So your responsibility. Unless Amazon deems the return to be their fault. So if an item was damaged in an FBA warehouse, for example, or by the carrier that they used, then you can claim reimbursement. But aside from that, you have very little say, unfortunately, um, on what can be returned and what can't be returned. One thing to.

Speaker A: Yeah, one question I hear when you say responsibility, you're talking about the who's covering the cost, right?

Speaker B: Yes, that's correct.

Speaker A: In any case, Amazon will replace the goods. So from the end consumer perspective, like whoever is paying is not his problem. He will get the product return and replace. Right. In 100% of the cases either returned

Speaker B: or replaced or refunded. So this is a really important distinction between warranty, um, versus just a straight return, which we can also talk about in the best practices.

Speaker A: Yeah, so it's saying, okay, the, the Amazon takes. When you're doing fba, Amazon does the job of uh, selling the products, uh, delivering, sorry, the product and also replacing refunding. And the question you were saying is, uh, that okay, in some cases Amazon will go get back to you and ask you to fund that replacement. Right. Except on some cases where you could challenge that saying, okay, no, you damaged it or something happened and it's your responsibility. How does that thing happened about um, between like who takes a decision that is or who admits it was damaged in Amazon's warehouse. So how does that happen?

Speaker B: So I'm glad you brought that up. There are two things. Um, first I'll go with sometimes it's customer reported. Um, and actually when it is customer reported, you won't always want to double check it because sometimes the end consumer wants a free return and so they'll say something like it was a faulty item when it's actually fine. Um, and then other times you have to dig in and possibly in some cases open a removal request and I'll chat about the best times to do this and when you probably shouldn't do this a little bit later. But the other thing I wanted to call out to everyone listening is what you want to remember is Amazon purchasers so end consumers have 45 days to return an item. So always keep that in your mind because like when you hit the 45 day mark past like December 31st or December 25th, you're in the clear. Any return requests that come in after that will no longer be from your Q4 sales, essentially. Um, the other reason that that's really important to remember is because say someone requests a return Amazon refunds them and basically charges you and the seller, um, if they don't return that item to Amazon within 45 days. If it's been 47 days or 50 days and you still don't have that item back in the Amazon warehouse or it hasn't returned back to your, um, to the Amazon, like FBA system, you can, you know, basically tell Amazon, hey, you never got my item back. We can't verify, like, why it was broken. Your, your merchant, your team, or your FBA team can't say, like, oh, it was damaged in shipping, so send them a reimbursement or anything like that. So you can actually request a, um, a reimbursement for that. So that's really important.

Speaker A: Like as, as a brand, a rebound reimbursement from Amazon for that. And this rule of 45 days, does that mean that as a customer, if I go on the day 47 and go to Amazon, say, okay, I'd like a refund, because, uh, the product doesn't fit or anything, will Amazon say, no, sorry, we don't take care of it? How. Well, how does Amazon, uh, handle that customer request?

Speaker B: You know what? I will have to get back to you for that because I'm the dream customer for Amazon. I've never returned anything. So I'm actually, I don't have real life experience on how this happens. I know how things should happen in theory, but how things actually happen to the customers, I can't say. Like, we can speculate.

Speaker A: Yeah, I have the impression that there's probably not a very clear rule, but my understanding, sometimes they send people back to the brand directly saying, okay, uh, after 45 days, we're not in charge anymore. You have to go to the brand directly. Um, and the, We've, we've had some, because we, we act as a seller in some cases, and we've had some, uh, horror stories about, um, uh, customers asking twice or two people. So they asked a refund to Amazon and they asked also to us, and they got refunded. We replaced the product and they got refunded by Amazon. So you really need to be careful about that process because basically you have to. People have to ask it to Amazon first and then go through that process and then Amazon bills you. Because if you go to customer direct, at least when it's fba, then you get to pay twice and the customer is happy because he gets a free product and a reimbursement. So that's amazing. Um, now, so we've seen the FBA part, which is mostly Amazon takes care of everything and sort of charges the brand or the seller with the cost, except the few exceptions when it's his fault or its fault. Um, now let's see when we get looking into DTC or fbm, like when the brand or seller is selling directly or shipping directly to consumers, what's the process? How's the process different here?

Speaker B: Sure. Just one quick tip that I thought of while you were sharing your horror story. You need to have a really clear return policy. So that is one of the best practices. You have to say if you purchase on this channel, you must return on this channel. If you purchase D2C, then you can return DTC. One quick tip that, uh, merchants can take away. Now, for DTC sales or FBM sales, we all know a high level overview of what happens. So I'm just going to highlight three key stages in the DTC return lifecycle that I want you to pay attention to. The first is the customer has to initiate a return. Right? So you need to make sure that the platform in which a customer initiates the return is trackable. So this could be your own, you know, loyalty, loyalty platform. It can be like a returns platform specifically designed for reverse logistics. But you want to see if there are any bad actors. Um, you can pinpoint, you know, a group of people who return 80% or 90% or even 100% of their items so that you can identify. Okay, in the future we will block this address, this email, this account, basically from buying because it's costing you money. Um, also in the middle of the returns process, uh, you need to decide when you're going to refund a customer. This is different from a warranty because you're issuing a refund. You can either refund a customer before or after your item returns to your warehouse. So if you have a really expensive item, for example, you want to refund the customer after you get the item back. So you don't get someone buying like a monitor or a PC or like a PS5 and then saying like, oh, I don't want this and returning a blanket that's the same weight, for example, right? So consider that. Consider your risk. Um, consider whether you want to prioritize customer experience for the good actors or you want to prioritize protecting your brand, your bottom line, if it's going to be a really heavy hit. So the last point of a DTC return that I want you to think about is what happens when you get the item back. Because you can be creative here. You don't have to waste that item, you don't have to throw it out. You can consider reselling it once you've done the quality assurance and made sure that it is a resellable item. So you don't. You want to make sure, like, you know, if it's wine, someone hasn't tampered with the seal, like that kind of thing, it can be discounted, so at least you get some revenue back. It can be given away if you want to be really creative. Like if you want to have a social media, um, contest and say, like, hey, get some almost perfect products, like by tagging a friend and sharing this or that, just with a little bit of paint chip, that kind of thing. Or if you have a warranty instead of return program, um, you should keep it for parts. Um, for example, if you are a suitcase brand and someone returns a suitcase because one of the wheels are broken, um, you might be able to replace that instead of replacing the entire unit. So those are what I encourage you to look at in the life cycle of a return.

Speaker A: I love that. The idea of, uh, uh, thinking the whole process of the life cycle of the product and say, okay, we have ideas to recycle, uh, those returns and you could generate like future sales with social media and having them as gifts. I love that. And another horror story we had for a brand we had, which was doing earbuds, very, like, very nice earbuds, and we had a return and inside the box they had put another earbud brand which was much cheaper. So it was a. And they got refunded on, um, obviously the more expensive ones. So indeed, you're right. Like this whole process of, okay, what do I do with returns, how do I check them out and so on. That's what makes FBA, in a sense also easier because you don't. You have less to think. But that can be also costly because Amazon doesn't check very well or thoroughly the reasons or what happened or what the returns. Like, we've had return. We sell. We sell at some point some cream and people will take half of the pot, ah, screw it back and then, and then ship it back. It's like, okay, we're missing half of the cream. And like, no one has been checking that. But it, obviously it's a bit gross and also a bit unfair on that. So I think, I love that thing about, okay, returns hurts your P and L a lot. And, uh, you need to be creative to find ways in order to hurt less and repurpose or reuse all of that. And FBA or FBM have got perks, um, and opportunities. Depending on the cost, on the number of people you have to handle returns, you will take one or the other. So now we've seen, we've had a good image about, okay, the process on returns. Let's look into the second part is like, how do we avoid returns? Like, how do we sort of protect our, uh, P and L from, uh, early on? And I think that's where you have a lot of learnings and things, uh, to share. So, like, an angle to get started is what are the main reasons, uh, the common reasons for returns, and then starting to start from there and finding reasons to. Or ways to, uh, overcome that.

Speaker B: Sure. So because of this point in time of the year that you're listening to this webinar, I would say that the most important thing to take away from here is prevention is better than the cure. Right. It's better to avoid a return altogether than have to deal with the reverse logistics and spend more money, waste your inventory, possibly lower your customer experience a little bit, and, um, all of that. So the way that you can start thinking about this, um, I have a framework for thinking about returns. And it's batching the reasons for returns and then addressing them systematically one by one, the top reasons for returns. And then Jerome, you and I can discuss what would be the most relevant to dive into. We don't have to go into all five. The top reasons for returns, I would say, are customer selection issues. So this would be, ah, customer selected the wrong size, they selected the wrong product. They thought it was, um, the full machine, but it was just a part like that kind of thing. Um, or they no longer needed or wanted the product. Another common batch or kind of field reason for returns is merchant and shipping issues. Unfortunately, sometimes merchants ship the wrong size. Um, maybe the product was defective from the manufacturer. And especially relevant in Q4 is sometimes the product arrives too late. Like they arrive the day after the holiday giving season or your Secret Santa or someone's birthday. And so they're just like, well, I don't need this anymore. I found something in the store down the hall, down the road kind of thing. Um, the third most common kind of batch of reasons for returns is expectation setting issues. So if you don't set the right expectations, um, maybe someone doesn't know how to use it. So they're like, oh, this is actually like, not a good product. But really they. There wasn't enough customer education. Um, sometimes the product didn't match the description. Sometimes, you know, they think, oh, it's like, um, have you ever seen that, that Bob's Burgers episode where he ordered. He thought he ordered a coat rack, but he ordered a mini coat rack for, like, children or for, like, a dollhouse or something. So not setting the right expectations. Um, and then you have the fourth kind of bucket of reasons for returns, and that's just straight up fraud. Unfortunately, people are going to try to game the system. They're going to not really care about your business, um, and your profits and margins, and they'll just order a bunch of stuff with the intention of returning it. Just, like, wearing it once and returning it, um, or just, you know, outright fraud. And then you have your, like, miscellaneous reasons for return. So the product was a gift and it was the wrong shade. Um, the customer is like, oh, do I really need this? No, I guess not. So buyer's remorse. Or maybe they find a better price elsewhere. So out of the five, um, I mean, I don't know if you want to ask, chat, or if you can point, uh, out which of the five that you've been hearing from your audience so far, we can dive into one.

Speaker A: I think the most exciting for me or the most complicated is probably, uh, delivery time. Like, it was too late. Uh, obviously this is more a D2C thing, because when you're doing FBA, Amazon is doing that. But this spot, I think, is the most, uh, critical, uh, uh, one to control. So I'd love to hear your thoughts on that one.

Speaker B: Sure. So when it comes to merchant and shipping issues, it's all about your partners. Um, so I didn't ask Jerome to dive into here, but this is where my FA prep comes in. So your suppliers, your manufacturers, your three pl, whoever is doing your FBA prep, even, um, wink, wink. Those all play a part in how well your item is received by your end consumer and, you know, cherished, enjoyed, et cetera, at the right time. So a few tips here are, whenever someone checks out, you know how you have a price and shipping time option. Instead of just putting something like, you know, delivers in the next two days, you want to put delivers by, you know, December 18th or December 20th. So put the actual date that they'll get it. Um, offer different options. So you want to not just do standard and next day, because sometimes people will say, like, oh, that's too expensive, but standard is too late, and so they'll just abandon their cart. And you don't want that. Right. So offer, like, I would say, three, maybe four options. Um, you can have standard shipping, which can be free Over a certain amount. If you've spent $50 kind of thing. If you're worried about offering free standard, you want to do like two day or next day. So you're really fast, um, fast options. If someone really needs like they forgot their kid's birthday or they forgot this and they're like I need a present now. Right? And then uh, you have like your mid tier which is like three to three to five days maybe um, instead of like seven. And uh, what I've heard, just uh, not on the logistics side but on the like revenue side is you want to have your biggest margins, um, or like your, you want people to choose the middle option. And so that option is usually the best for your revenue. Um, another really important thing under merchant and shipping issues and dealing with that and preventing returns caused um, by merchant and shipping issues are just keeping your customers informed. And it's also good for your customer experience. Right, because they're never left in the dark. I'm sure everyone listening already knows when someone makes a purchase, you send a confirmation email. In that confirmation email or whenever you have it, include a tracking number. Um, reiterate like your item is supposed to arrive by this day. This is scheduled, this is your shipping tier. Um, just you know, keep them informed. Um, and then some customers, especially for your, your higher value items, they will really appreciate like SMS updates, email updates like your packages at your doorstep. I know Amazon does this in a lot of cases already as well. Um, and then back to the partners and how important partners are, um, to prevent these merchant and shipping issue like returns. Um, are you want to avoid damages with proper prep. So what we do a lot in my FBA prep is we figure out the best way to pack items in a box or in a whatever, however you want to send it, envelope, box, anything. Um, especially if it's more than one item. If it's more than like one, one or two SKUs and you're doing like a bundle or like a basket, figuring out how to pack it so it maximizes the space because you don't want it to be too big, right? Or so you're going to pay more. Um, and so that they fit snugly together so they protect each other. You don't want anything rattling around. So if you pack your items properly, proper dunnage, proper, you know, sized boxes, proper, proper everything, your shipping or your shipping carrier can throw that around and your items will arrive. I mean the outside will not look great, but your items will arrive intact. Right? Um, and just find like a good, you know meticulous3pl. You want someone who is going to care about your customer experience and how they get your items. Like you know, things are neatly folded and stacked instead of thrown in like it's a laundry basket kind of thing. So yeah, those are our top tips.

Speaker A: Great. And I like, like for me this communication skill is one that Amazon has mastered very well. Like you get information constantly and regularly and that's why a lot of customers keep the prime um, like purchasing because they say okay, I know, I know I'm going to get that quality of level of delivery. Uh, and my only like personal experience, uh, that I get a lot of SMS or text messages. When they deliver too much it's like okay, why are you sending? There is even they. There's a bit, there's an element of over communication but probably better than none. And I think um, towards that and I've seen it's, it's some, it's. It's interesting because they, I would say 90% of the time they never miss what they committed to. Only some carriers and I seen in France for example, where I live, it's when they use a French postal system that's the only one which sometime is late so they miss by, by a day or something or they committed and they didn't do it. And I can get a feeling why know who didn't deliver. But like beyond that it's like I think the key is the, when you're doing FBM or D2C, the key is integration of different systems and alert systems. Right. So the key is like everyone wants to over communicate but it's like how do you automate this thing where you know where your parcel is? You know, so a lot of carriers can do that today, but it's like how you get that information through the API to your own system, to your own CRM which sends an email and Amazon obviously got that. Do you have any um, tips? It's probably, it's a, like it's a technical question but like is there anything like was it my FBA prep where you discuss about those things about how you get that process of getting the information because everyone wants it, right, but technically it's not very easy to do.

Speaker B: Right. So is your question how to get those updates to customers?

Speaker A: Yeah, it's like do you have these IT discussions because it's in the IT system, right? Kind uh of. You need to get. You've got different system, the carrier, the logistics center, uh, your, the customers, sellers, CRM and sending information to end users. All of that has to communicate together and that's not easy. Right.

Speaker B: So I know there are tools that depending on your shipping platform, will integrate your carrier. So you basically buy your labels from them. Um, you send them out. The tool will automatically email the purchase, the customer or the end consumer. This is your tracking number. And then I've seen like dhl, a lot of the modern carriers, their tracking system is really convenient. Um, you just enter your tracking number and then you see like little green dot among like where it's been. Like I sent some documents the other day to the UK and it went to like Singapore, Thailand, Hong Kong. I was like, where are you going? Go to the uk. But I saw exactly where my documents were throughout the process. So I would say look at tools that integrate and uh, you know, a quick search will show you all of that. For my FBA prep, we do have Preptopia, but that integrates directly into um, Amazon Seller Central. Instead of like a sales channel to, to send out like customer communications.

Speaker A: So the, the end consumer get information from Seller Central. Is that what happens when.

Speaker B: Not unless it's fba. Sorry, not unless it's fba. Usually it's right. So if it's fba, that'll, it'll even pop up on their app. Um, so yeah, Amazon really has it down to a T. But uh, for D2C, you need a dedicated app for those updates and that CRM for the continuous communication.

Speaker A: And that's when also the decision regarding FBA and FBM is like those part is so important. And that's why also when you talk about winning the buy box, the FBA will win more of the time because the service, uh, or the customer journey is smoother there. The information available usually is better. So that, that's where I makes a difference. Right?

Speaker B: I always do recommend fba. It's very rare that I will ever recommend fbm. But even beyond that, once you get to a certain level of sophistication in your business, I actually recommend having both. So you should just to protect your customer experience or protect your listings and your sales volume, you should have, you should ideally, you know, for example, be FBA first and then have an FBM backup. So in case something sells out in FBA while you're getting items, while you're rushing items into fba, basically to replenish that listing, um, turn on your FBM listing and sell on that instead. And it's the same concept, you know, with anything in E commerce. You want to create redundancy because it like kind of Protects your customer experience. Like for example, with my FBA prep, if we have a customer who has items in two warehouses, if you know, items en route to one FBA warehouse, like the, the truck, you know, knock on wood, crashes into a ditch, we can route items from another warehouse. It's just a, uh, it's just backups. Like you want to have a lot of backups. This was more relevant um, you know, a couple years ago during like 20, 20, 2021. Um, but I, I would say it's still relevant now.

Speaker A: And I've heard like, I've read that some of the uh, warehouses or like FBA warehouses are full, uh, I think on the, on the west coast, uh, from Amazon. And then like you get issues in deliveries. So when you can't get products into your FBA warehouse, FBM is like, it enables you to go on selling even if it's not the best solution. It's better than nothing. And like building on that question, have you seen also issues on FBA warehouses from Amazon lately in the U.S.

Speaker B: i would say no because my FBA prep has. I, um, mean we really enjoy like doing what we do for Amazon sellers and fba. So we haven't seen a huge issue with you know, an item or a batch of items getting rejected or anything like that. What I will say is, um, Amazon has started requesting before you could just send items to one warehouse and then it's covered in fba, right? It's covered in prime. Now Amazon has started requesting merchants actually send items to potentially a couple of different warehouses. So that looks very different in terms of costs and fees. So what my FB prep has started doing is we batch leveraging economies of scale. Sorry, we batch um, different customers items together for a full truckload and those are a little bit cheaper, um, for what you get. And we send them out to different regions because Amazon also has like regional pairs where you know, you send it to this location and it'll cover these regions kind of thing. So that's like one way to lower your costs while kind of over kind of getting around the. Any, ah, any full warehouse issues? I can say that we worked with a customer who um, because a lot of their items weren't moving, they didn't have enough space allotted to them to replenish their best sellers enough. Right. So what you want to do in that case, and you know, that's where obviously the limitations to how many items you can send is such a pain because in Q4 you're going to sell a lot. What happens if all of your items are like, slow moving and your best sellers, you only have like, space to send in a couple thousand. What we advise, I can tell you this, like, because we did it for this customer. What we advised is they pull out. And we did an analysis of this as well. They pull out like their slowest moving SKUs, the ones that are not bestsellers, the ones that are bringing down their kind of, um, performance score. And that's really important too because Amazon will give you more or less, uh, inventory space based on that performance score. Um, and we stocked up on their best sellers instead. And so that actually helped their, their listing shoot up. It helped their sales, you know, shoot up. One thing that I think a lot of sellers overlook is or don't think about is Amazon will not give you the buy box if it thinks that that listing will oversell the amount of inventory that they have. Because it's just a risk, right? You put it on a, on the buy box and then a bunch of people purchase and then like, whoops, you know, we're sold out. Like, I think, uh, the algorithm is smarter than that.

Speaker A: So it is. And, but I think this is very interesting to look at your, your like health score on, on, on your seller account about how much stock you can put inside. Uh, one of the experience we've had is that um, when you ask Amazon to ship products back, if you get too close to like the cyber, uh, uh, Cyber Monday, Black Friday, like, they're super slow to react, right? So you, you want to do that a bit earlier on when they still have a bit of uh, time, right? Because you might end up like with them saying, okay, sorry, we really have no time to take care of your return because we're focusing on stock, we're getting in to sell out. Right? So is there like what, you have an advice or what's the right timing on when do you want to look at that and take the decisions of which products you want really to have in stock? Is that September? Is that October?

Speaker B: Um, you know, all items, I believe all items that had to be in, had to be in for Black Friday, Cyber Monday by something like October 19th. Don't quote me on that. But it was early, so I would say like, yeah, September, October is a good time to do it. And just so that the people watching this now are not like, at a loss, I would say if you want to avoid returns and you can't, you can't do anything now about like pulling your items out or replacing them or anything, just make sure you have Good guidelines and like size guides, um, educational materials on your listings. So it don't just have like the size guide for the usa have one for Europe have, have like you know, inches, centimeters, like you know if, if someone uh, is used to seeing their size or measuring their size in another country they should be able to find what your size, your relevant size is. So they pick the right items in the first time.

Speaker A: But I think that's a great um, great uh, tip. Um, so you gave us a list of five. What if we come back to the Original list? Uh 1. One of them I think is interesting is how you uh, fraud like how do you, how do you try to work around fraud? Like what are your main tips there?

Speaker B: So I know a lot of merchants are frustrated with this because it's, it's so obvious um, when you have the right tools to identify that, that someone is kind of taking advantage of your generosity I would say. So when you see fraud it is just straight up, you know, malicious, ah, uh, intent or it's out of necessity. Um, but I mean obviously it's, it's out of the terms of service. But someone can be wardrobeing or bracketing and what that means is they don't know what color will look best on them so they order all of your colors and they're only going to choose one and they're going to turn the rest. Or um, bracketing is like don't know what size or sorry, that's bracketing. Actually uh, wardrobe is like with the intention of I'm going to expand my wardrobe, wear this out and then return it and then it was like a free rental kind of thing. So keep these two in mind. Um, and then the way you combat that is for bracketing you want to have those size guides that I mentioned. I've seen a lot of really cool, um, really cool brands have like virtual try ons for glasses. You can turn on your camera and you know your shirt will turn the color of their shirt or like the, the print to see if you look good in it. I, I saw Amazon actually had some virtual try on options as well for select brands. So it's something that really works to help people choose what's the best choice for them, what looks best for the, on them without hurting your bottom line basically. Um, and then when you have wardrobing it's that um, that system. So Amazon will already have this. But if you sell like T2C having people log into their account before they can, before they can send in a return so that you can See who does this as a, as a habit, as a lifestyle almost. Um, and then for fraud I would say, you know, there's a lot of different types of fraud. You have people who you know, say they've never gotten something and but they have kind of fraud. So you want to always request receipts. Um, this just makes sure that there's a customer, they're a customer in the first place. Um, you can add tracking numbers and if it's high ticket items ask for a signature upon delivery. Um, and then there's also fraud protection. Like it's, it's unfortunately so prevalent that there are entire companies built to kind of provide insurance for, for fraud and in particular return fraud. So yeah, those are some of the things that you can do to kind of combat intentional fraud.

Speaker A: Yeah, it's true that sometimes you get deliveries where even the Amazon guy who's delivering like takes a picture and he just left it in the lobby of, of, of your, of your like or in the staircase and like it's like oh yeah, it disappeared like um, happened, it happened to one of our colleagues who had it delivered to our office and he just put it in the lobby in the entrance and like uh, obviously the, the parcel got like disappeared. So it's, there's also a lot of things like obviously when the deliveries are uh, not always perfect then it's difficult to know when it's full and not for. So after it's I think it's uh, working on it or trying to find ideas or when there's well and depending on the type of product you have, if it's electronics, if it's beauty, if it's uh, like ah, fashion obviously the, the habits are not the same.

Speaker B: Right. You know, it's kind of funny. I, I heard from um, I heard that there was, there are brands like jerky brands or like snack brands and sometimes they'll complain like their items sometimes never make it to the end consumer because someone gets like snackish or peckish along the way. And so another way to, to prevent like you know, outright theft could also potentially be use plain packaging. Like don't advertise the PS5 on the, on the you know, shipping and delivery box. Don't advertise jewelry or like beef jerky or something like that.

Speaker A: Yeah, probably because your, your dog see smells it and wants to have a bite. So I think now we can open a bit to um, the Q and A. So uh, everyone can uh, drop um question in the Q and A section or in the, in the chat section. I have Already one here. Ah, which is, um, about. You mentioned the return program and the warranty program and the difference between them. So the question, like, could you explain a bit, uh, what are the differences and what, what does that mean?

Speaker B: Sure. So something that a lot of sellers think are interchangeable, um, is a returns program versus a warranty program. But they're actually very different things. And the questions that you need to ask when deciding, you know, on one or the other are also quite different. So in a return program, you have straight returns, so they give the item back or not. It's up to you. Um, and then they get money back. In warranty, you keep your sale, you keep your revenue, but you guarantee that you will replace the item whenever it is needed, if it arrives broken, if it breaks within a certain amount of time. And so there are pros and cons to both. I would say for returns, it's very simple, it's a little bit easy to keep track of, but it's also wasteful. For warranty, you still get to keep that revenue. So your customer acquisition spend is not wasted on the return. But, um, it's potentially. It can be more. It can be more wasteful because if there's something you can't fix, like I had a suitcase that got a crack and I wanted them to fix it because it had, like, my pet painted on it, but they said no, we have to replace the whole thing. So in those cases, um, sometimes it's, you know, more wasteful, but the trade off is worth it because there are some times where someone will want to return something because it's broken and you can just take apart from something else that was also returned, fix it, send it back, save your revenue.

Speaker A: And it's also, like, from an environmental point of view, uh, better and greener. But I think that's also something, uh, more and more customers are, uh, open to. Uh, so there's a good, like, win, win, win kind of approach there. Um, I got like, we're coming, we're coming out. At the end of that, uh, webinar, I have, um, one question, uh, which probably could be the last one. Let's see if we get other ones after. But it's, uh, the question goes like that. How can I lower, uh, the logistics cost of returns? You probably have tips on that part.

Speaker B: Right, Right. So again, it's all about your partners, because your partners can leverage economies of scale. Um, if you work with someone like my FBA Prep, um, you'll find things like lower. So this isn't directly related to Returns, but lower cost of dunnage, lower cost of packaging. You'll see, you know, we'll be able to consolidate your items coming and going, um, so that it's a little bit more affordable. Um, that also plays into the whole fba, like in, you know, placing different items in different FBA warehouses to avoid an additional fee. We can get items to fill a truckload and then go to all those places because you can leverage those economies of scale. I will say for any, any seller, any merchant that has a physical store. It's also a very clever idea to encourage return in store because this way you get people to look at your other items and maybe you can save the sale. They say like, oh, I actually want to exchange it. Um, maybe you can, you do the return. But then they're like, oh, I actually, I want this thing that I saw instead. So you, you get to keep the customer for. You get another touch point, another opportunity to save that, that customer and turn them into like a long term customer. Um, in addition, it's just, you know, they are the onus of like the gas, the time, all, all the, all the resources that go into returning an item is on your customer. So you will give them a return, but that's all you have to give them like their money back. You don't have to spend on shipping labels, etc. Oh, and speaking of shipping labels, your return labels should always be um, like pay upon use. Because sometimes you'll see people who are like, actually I, I do want this. Like I requested the return, I got the label, I printed it out, um, but I decided not to use it because I decided, you know, I actually do like this, you know, shirt, whatever. Um, which reminds me, sometimes you want to consider a longer return window. Like you'll see mattresses do this just because, um, sometimes it takes a while for people to get used to something. And uh, this isn't relevant to FBA because you have that 45 day set window. Um, but for D2C, you can consider for items that you like, a mattress you can't really resell. You know, no one wants a used mattress. For items like that, you can consider just lengthening your return because then you have the revenue for longer and it kind of helps, um, with cash flow and all of that good stuff. I have one last tip if we have time for it, that I'd love to share because it's one of my favorite tips for D2C, especially during Q4. Consider pushing gift certificates. Um, if you can get someone to buy a gift Certificate as their present instead of your bestseller, you have your bestseller on hand in the inventory. For people who really want it and will not return it, you um, get the giftee so the person who received the gift certificate as potentially a new customer, brand new experience to your brand. And then if they spend less than what's on the gift certificate after a certain amount of time, you know, consider that your revenue, additional revenue. If they spend more, it's a good way to upsell, you know, some like I will always spend more. If I have a gift card, I'll always go a couple dollars over. So just so I can leverage the full gift card. Yes, yes. So it wasn't $108 purchase. It was an $8 purchase for me.

Speaker A: Exactly. So we'll, we'll close on that. Great idea of gift certificate. We just in the month of November. So maybe good uh, idea for people to buy for Christmas gift, uh, certificate and uh, for brands to, or sellers to offer that for their customers to buy. It's a good way of mitigating uh, your stock and, and sort of the, it's a longer time value because then it will be purchased afterwards maybe. So great, great tips. Thank you very much, Rachel. It was a great um, a great session for me. I learned a lot of things about how to reduce um, the uh, returns and, and, and what, you know, what, what can be done to improve that? There's a lot of different things. We didn't go into the details of everything. So how can people reach out to you Rachel, to uh, get more information?

Speaker B: So because there was so much information that I wanted to share on this webinar, it ended up being like a 20 page like outline. So I've really just picked out the best things here. I plan to publish like the full document, the full list on the MyFA Prep blog. So if you would like to sign up for our newsletter, um, it's just on our website there's like a little newsletter tab. I would love to have you on there. Um, we send out emails very frequently and they're not all puff pieces. Like it's really meaty stuff. Like I love the type of content that our writers and our founders put out there.

Speaker A: Awesome. And if they want to have, they have a question for my FBA prep. What's the best way to get in touch with you guys?

Speaker B: Please go to myfbaprep.com all one word and then fill out a contact form. Form submission. Yeah.

Speaker A: Amazing. Thank you very much Rachel. Thank you everyone and be well and good luck. For the sales of this year with as little returns as possible. Thank you very much.

Speaker B: Good luck.

Speaker A: Bye bye. 3, 2, 1. Welcome to the E Commerce Made simple podcast. I'm Gerard De Guignier, your host. I'll do it again. 3, 2, 1. Welcome to the E Commerce Made simple podcast. I'm Jerome De Guignier, your host and in this episode today, I'm happy to welcome Rachel Go from my FBA prep to talk about returns. Now, what it means, what's the impact of returns, but also how you can prevent, uh, having and getting returns. Why is it so important? Is as a seller ourselves, we have seller accounts in different parts of the world, Amazon seller accounts, but also on other marketplaces is that returns can be the only reasons which make you successful or unsuccessful, which can help you make money, but also help you lose money or uh. So understanding how to avoid that is critical. We have so many fun stories which we share during that, uh, podcast about things like how people make returns, like funny returns. They replace the product with another one to get, you know, the best solution, like earbuds or earpods. They will replace and put cheap ones and send you back the cheap ones. Or, uh, beauty cream where they take half of the part of the cream out and they send it back to you. Things like that. It happens a lot when you sell and the more you sell, the more, uh, you get of that. So for us it's so, so important to be on top of it, understand your customer, understand what happens and, and sometimes be creative, be, be, be funny about it and, and still keeping in mind the customer, but also keeping your bottom line in mind. So I hope you'll enjoy that, uh, podcast and uh, yeah, enjoy, have fun.