Retail Return Season: Defectives vs. Damage

Holiday returns are here—and how you classify them decides whether you pay for them later. You must separate true defective products from shipping damage or policy abuse (like “used once, then returned”) before retailers reset your “excessive defectives” rates.

What’s at stake: the wrong label today can lock in higher return allowances or additional chargebacks for months.

Fictional example (for illustration): A home electronics brand treated all returns as “defective.” Later analysis showed that 42% were crushed cartons and corner dents—classic carrier damage. They retrained their return merchandise authorization (RMA) intake, added photo evidence, and cut “defective” classifications nearly in half the next quarter.

Build a returns taxonomy that stands up to audits

1. Defective (true quality failure)

   • Evidence: Serial number, batch/lot, failure description, and photo/video of the issue.

   • Next step: Route to quality assurance (QA) for root cause; consider hold/recall if clustered by lot.

2. Damage (in-transit or warehouse)

   • Evidence: Outer-carton photos on arrival (all sides), inner pack photos, and carrier inspection notes.

   • Next step: File carrier claim; keep bill of lading (BOL), POD, and photos together.

3. Remorse/abuse (policy misuse)

   • Evidence: Opened/used product with no defect; repeat serials from the same account; signs of “wardrobing.”

   • Next step: Enforce policy limits; require restocking fees where allowed; monitor repeat offenders.

Process upgrades that change the math

• Photo-first RMA intake: Require 4-side box photos + inner pack + defect close-up before issuing refunds.

• Reason codes that matter: Map reasons to “Defective,” “Damage—Carrier,” “Damage—Warehouse,” and “Remorse/Abuse.” Do not lump “broken” into “defective” without proof.

• Carrier accountability: For damages, open claims within the carrier’s window; attach BOL, POD, and photos to the claim and to the AP dispute record.

• QA loop: If a defect pattern emerges (same lot/date), open a corrective action and isolate the inventory.

• Retailer appeal packets: For “excessive defectives,” submit a packet separating damage from defect with counts, photos, and carrier claim IDs.

Metrics to watch weekly (peak + 60 days)

• Return rate by SKU and retailer

• Defective rate vs. damage rate (% of total)

• Photo compliance (% of RMAs with required images)

• Carrier claim recovery (% and cycle time)

• Repeat serials (possible abuse)

Quick checklist

• RMA requires photos before approval

• Reason codes mapped to Defect/Damage/Abuse

• Carrier claims opened within the window

• QA reviews clustered defects by lot

• Appeal packets separate damage from defect

Wiser Decisions. Fewer Deductions. Contact us.

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