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Are Your Returns Really That High?


3/12/2009
By Mark Phillips

 
Mark Phillips
We must always challenge assumptions, even if we sometimes don’t want to do it.

Since coming to this industry, the magic number I’ve heard regarding the percentage of parts that come back as returns is 25. I’ve heard the figure repeated in conversations, speeches and repeated it myself, apparently without thinking much of it.

But then I got to thinking: Can returns really be 25 percent? After all, if that’s true, it’s a bit unbelievable. For instance, could it be that the advent of online parts ordering, enhanced training of counterpros and technicians and increases in parts quality hasn’t done a single thing to reduce returns in the past, say, decade?
If the 25 percent figure has stayed consistent over the years, it means everything this industry has done to attempt to reduce it has totally, utterly, completely… failed.

So is 25 percent accurate? I worked with our research department to find out. We surveyed 126 aftermarket professionals (90 percent of them jobbers, 10 percent retail store professionals).
After sifting through the results, I have a new number. And it’s a good one.

9.7.

Like it?

If 9.7 were an earthquake, it would be felt the world over. Which is what I’m hoping this new number accomplishes. 9.7 means things are going right, or at least better than they were before. I believe at one time 25 percent was probably accurate, but now it’s clearly not.

In fact, a full 45 percent of those who responded to our survey say about 5 percent of the total sales (including warranty, cores, etc.) come back as returns; 6 percent said the number is 21-25 percent; and 4 percent of responded said returns were more than 25 percent. For the average of 9.7 percent, 49.4 percent of those returns were cores; 16.8 percent was the wrong part ordered; 16 percent was warranty/defective; 10.3 percent was other; and 7.6 percent was wrong part delivered.

The new 9.7 number is a double-edged sword. While it’s good that returns aren’t seemingly as bad as previously thought, if returns were being made the scapegoat for problems at a jobber or retail store and returns aren’t that bad, what else is causing problems? I called a number of industry pros to get their take on the 9.7 number. Several counterpros were frankly surprised to hear the number. They were almost certain it was more. But the head of a program group told me the 25 percent figure was the real surprise; in fact, 9.7 percent wasn’t much of a surprise to him.

I did a little digging and found out that in 2005, Counterman magazine did a survey of counterpros and found that retail stores said 16 percent of sales were returned; it was 13 percent for jobbers. At the time, not much fanfare was made of it. So, could several percentage points be knocked off the return figure in as many years?
I’d like to think it could happen. After a little research, I have 126 of your fellow counterpros telling me returns aren’t as bad as you might think.

How does the 9.7 figure sit with you?
  Previous Comments
avatar   Dan   star   5/25/2010   5:07 PM

I think you are all looking at the numbers incorrectly. Because you can't do anything about cores or if the customer orders the incorrect part. Especially if you advise the customer that the part isn't correct. Look at the fact that only about 3.2 percent (9.7x.338) of the returns are due to factors within the store's control either through inventory management or training or materials handling. So I guess the real question would be, why is there such a poor outlook on inventory control in the parts industry?



avatar   Ron    star   5/15/2010   10:18 AM

I have to agree with everyone here about the lack of information provided by both D.I.Y and the D.I.F.M installers. I will also say that information that we need as counter people is sometimes limited from our employers. I myself have invested in a few Hollander interchange guides (one for V.I.N. decoding and the other on parts identification ) I have used these books countless times with my commercial customers,well worth the investment.



avatar   DaveW   star   5/11/2010   11:09 PM

I've worked at Kragen O'Reilly for a bit more than a year, my first experience in auto parts sales. My limited observations reflect what many are saying above:



* Lack of knowledge by customer of their own vehicle - year, engine displacement, etc.



* Jobbers that don't do their homework; or who call, blurt out the part wanted and vehicle while you are still greeting them and hanging up on you about the time you realize what just happened; when you call them back to get the facts you get a busy signal because the're on the phone to Carquest and Napa for the same thing.



* Multiple stock codes for same year, part needing replacement (oil filter for late model Ford 4.6 V8; GM transmission filters, etcetera).



Some of our jobbers do know their stuff, do their homework or call with the part number.



Sometimes you have to put on your Sherlock Holmes hat; sometimes you have to simply roll the dice and hope you have a winner.




avatar   John   star   3/29/2010   11:09 AM

While it is impossible for the "Big Three" to pay every team member top wages, Oreilly's at least has seasoned experienced vets in each of their stores. No different than napa or carquest as far as knowledge in the store. This allows the "Big Three" to be more competitive in all markets of the aftermarket. No matter the knowledge of the team members, you always have people that are working on their vehicle but should not be doing so, wrong or not enough info, and mis-diagnossis. People in the parts business know that we parts people catch alot of crap because a cusomer blames us for them getting wrong part when it was them who did not have all the info or the right info the first time.



avatar   Rich   star   3/18/2010   10:50 AM

I would say returns are more like 20% - taking into consideration some shops just order parts to have them there and then when the job doesn't materialize, here comes the parts back.



Check out my page of manufacurer links at:

http://automotivelinks.tripod.com



It's good for the parts professional!




avatar   judith   star   2/10/2010   6:27 PM

I wholeheartedly agree w/ Wedge Antilles. Inexperienced staff compiled with no farmer/rancher/old-timer wants a woman to tell them that they could possibly be missing something/doing something wrong; It's almost always easier just to "keep warrantying" part-after-part... (as long as my store gets credit).



avatar   alan h   star   12/5/2009   8:29 PM

In some ways I agree with Sebastion. I have been selling parts in both the powersports industry and automotive for almost 20 years combined. Incorrect vehicle information from the customer is the leading cause of returns in my opinion. Coupled with the fact that the manufacturers have many mid year part changes and several different options on common parts such as alternators and brakes within the same model. The days when we can say "their all the same" is long over.



avatar   Sebastian   star   9/26/2009   10:59 PM

I've only worked for the company for about 6 months, but as far as I can tell, most of the returns I get are the customers fault. Being a counterperson, I have numerous customers come through during the day and I would have to say that at last 15% of them don't know exactly what kind of car they have. It's hard to help someone find the part they need when they have no idea what kind of vehicle they drive. A lot of times they are unable bring the car with them to the store. In these instances all I can do as a counterperson is sell them the part for the most common car that matches their description.



avatar   Corey   star   7/15/2009   12:38 PM

In my 20+ years in parts, both retail and dealership, the most irritating problem regarding returns is the unwillingness on the part of both the tech and the parts pro to obtain ALL of the CORRECT information on the vehicle in need of repair. I recently needed a brake code on a mid-90s GM product to get the correct brake parts, it was like pulling teeth! This is SIMPLE stuff. Rather than giving me the correct info, my customer expected me to go to the warehouse, pick up ALL of the possible parts, ( calipers pads hoses ) then he would return the parts that didn't fit. ABSURD I say. If this were done, you would surely get back mangled, greasy, unreturnable parts. This plays its self out day after day at every parts source in existence. High returns you say? Try sending the right part the first time and watch your returns shrink like a salted slug!



avatar   Rob   star   7/7/2009   11:53 AM

Being able to help the DIY troubleshoot from the get-go is what keeps my DIY warranty around 1.27%. As far as the installer side, I run between 2.21 and 3.39&. Knowledge at the counter is as important as knowledge at the shop.



avatar   Randy L   star   6/17/2009   9:50 AM

I have been calling on repair shops for quite a long time as well as worked the counter. It is interesting that both Steve and Tim point to miss diagnosis. I would like to see hard numbers of what warranty/defect parts are really bad. Munufacturers tell us that a large percentage are actually good. I also know that tech training is practically non-existant. I believe in another babcox publication statistics on training shows that 78% of techs recieve no more than 5 days of training per year and half of those recieved 1 day or none. My question is; is this enough? Shop are constantly pushing for better pricing and faster delivery, what is the cost to deliver a miss diagnosed part, then return it or worse yet claim it as warranty/defect and then submit a labor claim. What does this do all the way up the supply chain?



avatar   Steve T.   star   3/13/2009   6:42 PM

9.7% sounds like a dream! Now i've only been in the business for about 5 years now. But for what i witness on my end of the game, is almost safe to say anywhere between 10 and 25 % is returned. Mis-diagnoses is the most frustrating part to get back. Especially when its an electronic part, because its almost guarnteed that part was installed. But did not fix the problem. Now, you as the jobber are forced into A. rejecting the return B. Faulty the part. Since the part is now not sale-able. Among the legitimate claims for warranty items, how many of those parts are there for the same reason? Mis-Diagnoses. Are we, the Parts Specialists missing something?



avatar   JIM   star   3/13/2009   3:54 PM

9.7 IS STILL HIGH BUT BETTER THAN 25. I'VE BEEN IN THIS BUSINESS OVER 30 YEARS, BOTH IN RETAIL AND COMMERCIAL AND WORKED AT A DEALER SHIP. WHAT I FOUND OVER THE YEARS IS THAT MOST PARTS RETURN WHERE SIMPLY NOT NEEDED OR MISS DIAGNOSED. NOW IF YOU REALLY WANT TO GET INTO RETURNS, SELL TO BODY REPAIR SHOPS. YOU'LL SEE THE NUMBER OF RETURNS INCREASE. THE REASON FOR THIS IS, LET'S SAY PADDING YOUR ESTIMATE. THEY'LL PUT AN ESTIMATE TOGETHER SUBMITT IT TO THE INSURANCE COMPANY, GET APPROVED FOR THE REPAIR. THE SHOP WILL EITHER GET PARTS USED OR STRAIGHTEN THE DAMADGED PART. THEN THE BODY SHOP WILL RETURN THE NEW PARTS FOR(FOR WHICH THE INSURANCE AS APPROVEDAND PAID FOR OEM OR AFTERMARKET CAPA CERTIFIED)FOR CREDIT. HAPPENS ALL THE TIME.

















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