Retailers are making returns harder. A carpet seller taught me why that’s a mistake
A standard business practice offsets future costs by funding a reserve for returns – but many small businesses don’t do it
TL;DR
- A reserve for product returns is a standard business practice to cover potential future costs.
- Jerry Crawford, a successful carpet wholesaler, built a reserve of 0.5% of sales to cover returns.
- He factored this cost into his pricing, making the additional amount negligible to customers.
- Many modern retailers are making returns harder with surprise fees, shorter windows, and warnings.
- This approach can lead to customer animosity, reduced loyalty, and unfavorable press.
- Instead of creating obstacles, businesses should build return costs into overhead and pricing to maintain customer satisfaction and loyalty.