Helping customers exchange limited-quantity items

08Mar13

A few days ago, I bought two really neat pieces of art online. Each one was a canvas print mounted on a wood frame, and the price was hard to beat. When the art arrived, one of the items was in great shape, but the other one had a defective frame. No matter how I tried to hang it on the wall, it always stuck out on at least one corner.

So, I contacted the retailer about the problem. What I really wanted was to exchange the picture for another one, but that apparently wasn’t possible. You see, this was one of those daily deal sites where they have a limited quantity of each item. Once they’re sold out, there’s no more inventory to draw from. Thus, I ended up having to return the item for a refund.

Clearly, this situation isn’t optimal. The customer doesn’t get a working product, and the retailer loses the revenue from the sale. But if your business model is to sell things at a discount until every last one is gone, how can you prevent problems like mine?

The answer is actually quite simple. Before you start selling the limited-quantity item, set aside a few units to use for customer exchanges. Then, run your promotion, sell out the rest, and deploy the reserve units as needed when a customer has to exchange one. Finally, if you end up with leftover inventory once the last return window has passed, just run another deal with those extra units. If the original batch sold out, I doubt you’ll have any trouble moving a few more — with the caveat that those final items can only be returned for a refund, rather than exchanged.



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