By Dr. Emmet (John) Fritch
Faculty Member, Reverse Logistics Management, American Public University
Retailers today are “sandwiched” between customers and suppliers. But over time, retailers can build relationships with suppliers as well as with customers.
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A critical element in retail is the relationship built among suppliers to retailers and retailers to customers; each has an impact on reverse logistics processes. As a result, returns from customers to retailers and subsequently returns to suppliers create negative supply chains.
Suppliers often accept products that have been returned by consumers from retailers. Returned products reduce sales commissions. Friction between sales personnel of suppliers and retailers increases when relationship building is not high.
When Salespeople Favor One Brand, They Create a Surplus of Less Favored Goods
Sales personnel often recommend products to customers. In some cases, selected products may not be high-quality or, in some way, do not meet customer expectations. When retail salespeople favor one brand of product over another, however, they create a surplus of the less favored goods.
A recent rise in the frequency and volume of goods returned to retailers has created supply chain challenges for both retailers and suppliers. Increased sales over the internet, primarily due to stay-at-home restrictions caused by the dangerous COVID-19 pandemic, have resulted in higher return rates. However, relationship building among the three parties reduces customer returns and the amount of goods processed in the reverse logistics direction.
Using social exchange theory, suppliers and retailers can create a negotiated, reciprocal joint-decision process. One technique involves stationing supplier personnel at retail outlets so they can interact with the sales staff. They can then observe retailers’ selling techniques and offer suggestions on how to improve the sale of specific products that the supplier wishes to promote. Suppliers likewise learn that the amount of product returns is beyond the control of retail personnel.
Combined Effort by Supplier’s In-Store Personnel and Retail Sales Staff Can Reduce Returns and Increase Sales
However, a combined effort between the supplier’s in-store personnel and the retail sales staff can reduce returns and increase sales. The combined effort expands as the relationship strengthens.
Both parties recognize the importance of attracting customers to the supplier’s brands. But traditional retail sales efforts tend to push customers away from brands carried by competing companies. With the combined relationship-based and adaptive selling techniques, the emphasis is on integrating manufacturers, retailers, and customers to attract customers to a brand.
When retailers are oriented toward learning and performance and supplier personnel are located in the store, the result is fewer consumer returns. Customers are more apt to keep products that have been well-positioned, promoted, and supported by the combined efforts of supplier and retail personnel.
One benefit of this technique is the strong desire retail personnel develop to learn and improve their worth. Engaging in face-to-face interactions reduces customer returns.
Adaptive Selling Behaviors Improve Customer Service
Adaptive selling behaviors, integrated among multiple organizations, improve customer service. Combining the efforts of salespeople in the companies supplying products to retailers helps supplier organizations and retail organizations see how customer needs align to services-provided integration. With integration in mind, sales personnel gain insight helpful in meeting customer needs.
Adaptive selling and retailer sales personnel learning/performance techniques reduce consumer returns. However, increased customer service, without these factors, does not reduce customer returns.
About the Author
Emmet (John) Fritch is an Associate Professor of Business at American Public University. Dr. Fritch earned his Ph.D. at Northcentral University. He earned a Master of Science degree in technology management from Pepperdine University. Dr. Fritch has over 20 years of experience in global supply chain management.
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