The net returns value is a computational amount which, from the returns recipient’s perspective, provides insights regarding the financial consequences of a return.
The basis is the expected resale value of a B- or C-return, i.e. the amount which can be obtained with the goods or their sold or recovered components on the market.
Acquisition costs are the costs which are incurred through the take-back of the returned goods. In the online trade, they include above all the return postage as well as the opportunity costs. The latter correspond to the refunded purchase price and/or the receivables write-off for a purchase on account.
The acquisition costs are subtracted computationally from the expected resale value.
In many cases, due to the opportunity costs, the net returns value is a negative value.
The processing costs encompass all expenditures incurred during the internal implementation of returns processing. They concern primarily personnel costs.
The processing costs can be minimized through efficient processes in the returns processing, the logistics and the customer service.
Processing costs reduce the net returns value.
With the term customer participation, one is referring to payments from customers to the shipper and/or returns recipient for the processing of the return. In this context, it may involve returns fees or the customer is obligated to provide indemnification and/or pay damage compensation. Requests can also be made for customers to pay for the maintenance or servicing of products.
The amount contributed by the customer is added to the net returns value.
Payments by the customer reduce the costs incurred in conjunction with a return and contribute to a positive net returns value.
Customer participations constitute only a small portion of the returns in practice.
Starting from the premise that the customers’ positive experiences with returns management increases customer satisfaction, one assumes that there will also be an increase in customer value (“customer value”) after a return has been successfully implemented. This corresponds to the total amount of the future profit margins discounted by the current interest rate.
During the determination of the net returns value, the customer value constitutes the sole non-objective value.
Based upon a new customer acquisition strategy, merchants can intentionally use the returns option as an incentive (promotion). In this case, the customer value increase can exceed the acquisition and processing costs.
The customer value increase factor is the most difficult to quantify during the determination of the net returns value.