The High Cost of Frame Returns

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Being Able to Return Product is a given in the optical industry. It is the bane of every manufacturer’s existence, leading to increased costs- which ultimately you and the consumer pay for. Not only are you paying the cost in the higher price of frames, but you pay again by returning product.

As most frame reps will attest, the #1 Question they are asked is ‘What is Your Return Policy?’. The return policy should have nothing to do with buying a product. The #1 consideration in buying any frame product should be the Sell Through! That is the one and only way you make money in frames. NOT Returning Product.

Just because a frame is sitting, does not mean it’s unsaleable. It could mean, it’s in a bad position in the office, it’s never been shown or tried on, you could be carrying too much product (see inventory management). In any retail environment, stock is constantly moved around, even Cost-Co’s product placement changes every month. It encourages the consumer to go though the whole warehouse to find the one product they are looking for- meanwhile picking up $100’s of dollars worth of merchandise.

No matter how you look at it, you lose money by returning frames. The keys to controlling  returns- work with your reps. buy only product that sells, and develop a mark down program that can work for you.

Controlling Costs By Controlling Returns
WHAT IT COSTS                  
1. Time

  • Wrapping/ packing
  • Trips to Post Office
  • Time spent with reps
  • Postage in and out
  • Cleaning Products
  • Time re-tagging, inputting new products

2. Money

  • $1.25 per frame/ return/ postage
  • Restocking fees can add up to 10%
  • Affects cash flow
  • Inventory fluctuations
  • Frames not on board
  • Higher frame prices
  • Patient ultimately pays cost and may leave
  • Product that is not re-saleable goes to those discounter who advertise 2 pair for $39.00

3. Backorders

  • Vendors Stock less product- don’t want returns

4.) Less New or Unique Products from Vendors

  • Vendors stick to basics due to lack of committment from retailers

5.) Tougher Return Policies

  • Less Support Materials
  • Tougher about any returns

6.) Less Service from Sales Reps

  • Reps don’t see often to service high return retailers. Most Reps are independent contractors, why should they continue to service you and lose money?

FRAME  RETURN COST

$80.00       Cost per frame
x      2        Number of frames
$160.00    Total investment

Cost if You Return Frames

–  $16.00    Interest at 10% (cost of having inventory on board)
–   $ 2.50    Shipping
–   $ 10.00  Labor
–  $19.20    Restock fees
– $49.70     Total out of Pocket Money to return 2 frames

Cost to Mark Down Frames

$80.00    Cost per frame
x 2.5        Mark up
$200.00    Retail
x   2        Total Frames
$400.00    Total Retail Price

2 Frames @    50% mark down
$200.00     Price after mark down
– 160.00    Cost of Product
$40.00     Net Profit

Doesn’t it make fiscal sense to have a markdown board? Markdown boards can help you in 2nd pair sales, provide customer satisfaction, keep your customers from going elsewhere and provide needed eyewear solutions to your patients.

Claire Goldsmith MidPage