Losing more than 1 million dollars of profit annually due to damaged goods returns. And they were not aware of the extent of the loss. This is the case of a large American retailer of home décor products. Want to know how this can happen to even the most savvy and successful retailers? Read all about it now in this case study.
Driven by the company’s purchasing and operations departments—whose performance reviews were impacted by how well they controlled the annual packaging spend—the philosophy was to focus on the unit cost for protective packaging components and not really look beyond that.
Other attributes were not primary considerations when deciding what to buy and from whom. That purchasing philosophy resulted in the use of traditional void fill to protect millions of shipments from multiple distribution center locations across the country.
Winds of change
The company was aware that their damage rate was .6%. However, the marketing department began to notice that negative customer experiences due to damaged goods were being shared across multiple social media channels. They knew that even a small damage rate of under 1% was adversely affecting their brand promise and customer retention goals, due to the negative experience “amplification” across an individual purchaser’s social media reach.
That was the catalyst for the company to rethink its approach....
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