How to handle drop ship returns

Shipping Management

More retailers are using drop shipping to effectively increase the variety of products they can offer to their consumers. However, the rise of drop shipping also complicates matters rather significantly, particularly when it comes to how to handle drop ship returns.

In the typical relationship between retailers and customers, retailers are able to handle any customer service inquiries post purchase because the product is their own. When drop shippers enter the picture, everything gets a bit more complicated because retailers are essentially middlemen, brokering products for the consumer. This creates issues when customers want to return products, because they often think of making the return with the retailer instead of the drop shipper. According to The Wall Street Journal, as many as one-third of all Internet sales get returned, so merchants need to be able to address this issue.

This poses the question: How are retailers supposed to handle returns on drop shipped orders? This is a tricky situation to approach because on the one hand, retailers need to look out for their customers and do their best to create a consistent shopping experience – including return policies – regardless of whether customers buy directly from the merchant or from a drop shipper. On the other hand, sellers need to keep the interests of their drop shipping partners in mind as well – the drop shipper-retailer relationship works best when everyone involved benefits and profits.

Picking the right drop shipping partner

Thus, the best way to manage drop shipping returns should actually start with careful selection of drop shipping partners in the first place. Retailers should look well beyond the bottom dollar when selecting their vendors. Giving a bigger cut of sales to vendors may be worthwhile if it ensures a more flexible relationship with drop shipping partners that allows merchants to also satisfy their customers more effectively.

Additionally, merchants should keep their drop shippers’ policies and fulfillment processes in mind when creating their return policies. A healthy relationship involves some give and take, so retailers shouldn’t be afraid to modify their own policies a bit if it helps align the service between their own operations and that of their third-party vendors.

Improve visibility throughout the returns process

Communication and visibility are important elements of the returns process as well, but it is especially critical when drop shipped products are returned. If the retailer uses multiple drop shippers to supply the product, they need to know which one fulfilled the order when a returned product is received.

An Order Management System that automates drop ship communication via email, FTP, API, or EDI to improve order status visibility can make drop ship management a much more seamless process. For a returned item, the drop shipper is notified so a credit can be issued if the retailer decides to ship the product back to the drop shipper.

Iron out the details

As Practical eCommerce contributor Jeremy Hanks noted, there are a lot of small details associated with the drop shipping process. Straightening these elements out can go a long way in improving the smoothness of drop shipping returns.

For example, are there restocking fees? Retailers may want to adjust their policies if a drop shipper charges a restocking fee on some items. Another necessary consideration is where returns will be shipped to – merchants may want to accept all drop shipping returns and send them in bulk back to the drop shipper, or they may just stock the returned product in their own warehouse to fulfill future orders.

These details may seem like small or secondary concerns, but they can influence the costliness of returns as well as the efficiency of the whole process.

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