Restocking fees?!? Are the legal

Wywth

andie_303 wrote: »

Thanks I thought about this too but when deliveries come in we do not necessarily know who they may come from to which to accept and which to refuse.

The returns to accept are the ones with the returns number you have authorised clearly displayed on. All the rest of the returns are rejected

Sandybanks

Incidentally, your example of the 15 or 20% re-stocking fee vs £39 replacement stock cost doesn't really stack up - you now have 2 products to sell rather than 1. A reasonable fee would be based on the cost of handling, plus any lost value due to either price changes or spoilage rates in storage.

You have missed something here especially as we are in a recession. Every time you double stock an item you increase the cost of your total stock. If you dont have the money to fund it, you will have to get it from the bank. If they give it to you they will charge. In a very short period you will run out of money and you are out of business. Try and keep a close eye on the items being returned. You will have some that are returned more than others. If your customers are dissatisfied there is something wrong with product. If you are a small company you cannot afford to start dropping customers.

Wywth

Sandybanks wrote: »

You have missed something here especially as we are in a recession. Every time you double stock an item you increase the cost of your total stock. If you dont have the money to fund it, you will have to get it from the bank. If they give it to you they will charge. In a very short period you will run out of money and you are out of business. Try and keep a close eye on the items being returned. You will have some that are returned more than others. If your customers are dissatisfied there is something wrong with product. If you are a small company you cannot afford to start dropping customers.

Hopefully the OP is not having that amount of items being returned, else, as you say, they have a load of dissatisfied customers and so they won't have a business anyway

Bad news travels fast, especially where the internet is involved.

somethingcorporate

Sandybanks wrote: »

You have missed something here especially as we are in a recession. Every time you double stock an item you increase the cost of your total stock. If you dont have the money to fund it, you will have to get it from the bank. If they give it to you they will charge. In a very short period you will run out of money and you are out of business. Try and keep a close eye on the items being returned. You will have some that are returned more than others. If your customers are dissatisfied there is something wrong with product. If you are a small company you cannot afford to start dropping customers.

But stock also allows you to satisfy demand quickly so it's not as simple as stock is bad - it's incredibly important for FMCG. If you have 2 purchases in quick succession and have to wait for a supplier to bring it in then a customer may well just go and buy it elsewhere.

I don't think having 2 £40 items in stock is going to cause anyone to run out of money.

Your points about high returns are valid but your scaremongering about holding stock, especially at this small scale we are talking about, is complete rubbish.

Edit: I think a 20% re-stocking fee is completely arbitrary and would be an unfair term. £5 or £10 an item is fine but your costs for returns does not scale with the cost of the item so a proportionate return charge is immediately on to looking like a penalty.

Mistral001

This 10 to 15 % that the OP is proposing is a cost that is being passed on. It should be kept as low as possible as far as I can see to keep your customers satisfied s with many customers it will be seen as a hidden extra in the same way as the some economy airlines add on charges. It is a cost, nothing more than that and can be calculated. If it is a high cost for whatever reason such as a high number of returns or not being able keep enough stock then it could increase the number of disatisfied customers and thus decrease sales in the long-term.

somethingcorporate

Rubbish, if I sell an item for £100 it does not cost me ten times as much to "re-stock" as a £10 item.

It would be a penalty under a contract, as re-stocking fees have shown to be.

It needs to be a genuine pre-estimate of loss for it to not fall foul of the regs and a % could never be a genuine pre-estimate unless you could prove that the cost of re-stocking was directly proportional to the cost of the item.

Edit: you seem to be agreeing with exactly what I say in post #3 http://forums.moneysavingexpert.com/showpost.php?p=57588651&postcount=3

Mistral001

somethingcorporate wrote: »

Rubbish, if I sell an item for £100 it does not cost me ten times as much to "re-stock" as a £10 item.

It would be a penalty under a contract, as re-stocking fees have shown to be.

It needs to be a genuine pre-estimate of loss for it to not fall foul of the regs and a % could never be a genuine pre-estimate unless you could prove that the cost of re-stocking was directly proportional to the cost of the item.

Edit: you seem to be agreeing with exactly what I say in post #3 http://forums.moneysavingexpert.com/showpost.php?p=57588651&postcount=3

Yes I agree totally with this apart from the rubbish comment. It cannot be a penalty and it has to reflect the true cost to the seller. However my point was that the number of returns could affect the costs associated with each item if the seller is not careful.

If the seller restocks an item when he does not need to and that sits on the shelf for 6 months as a result, then there are, interest costs and even a cost in having to dump or sell items at a sale price if they cannot be resold. These costs are price-related, but would probably be very low in comparison to the admin cost if returns are low and it might not even be worthwhile to add a controversal % to the cost rather than the straight-forward admin cost. However if there was a high percentage of returns requiring extra loans and a high percentage of stock to be dumped or sold at a sale price then these costs could be significant and the seller might be forced at charge the customer a % which might not go down to well and thus lose customers.

Thanks for the rubbish comment though!

somethingcorporate

Mistral001 wrote: »

Yes I agree totally with this apart from the rubbish comment. It cannot be a penalty and it has to reflect the true cost to the seller. However my point was that the number of returns could affect the costs associated with each item if the seller is not careful.

If the seller restocks an item when he does not need to and that sits on the shelf for 6 months as a result, then there are, interest costs and even a cost in having to dump or sell items at a sale price if they cannot be resold. These costs are price-related, but would probably be very low in comparison to the admin cost if returns are low and it might not even be worthwhile to add a controversal % to the cost rather than the straight-forward admin cost. However if there was a high percentage of returns requiring extra loans and a high percentage of stock to be dumped or sold at a sale price then these costs could be significant and the seller might be forced at charge the customer a % which might not go down to well and thus lose customers.

Thanks for the rubbish comment though!

My humblest apologies, I have been mis-reading posts (and having to back-track) all day.

You're correct - although I still think using a % is likely to be challenged by anyone with half a brain. Lost profit is not a reasonable loss or consideration to add on to a restocking charge as they would have the item to re-sell and have a duty to mitigate their loss. It's very similar to retention of a deposit debate we have on consumer rights all the time.

If they want to add something on I would suggest a small fee of £5 would be more than adequate but would still put some people off buying.

There are always for and against about holding inventory but a small level with some built in understanding of obsolescence (and taking the resultant hit) is mandatory for any company.

terra_ferma

I think the issue here is that returns are treated as an 'unforeseen' event, that is likely to cause a loss to the business.
In my opinion returns (in the same say as stock 'shrinkage' that includes faulty items, theft, lost in transit etc) should be included in the pricing strategy.
For example analysing all of these elements at least once a year and add as a percentage when pricing products. This is going to be much more popular with customers (nowadays few companies charge restocking fees, and many people would be put off by them), and avoid a lot of time wasted dealing with disgruntled customers who are not happy about it.

simplydevine05

A customer has to inform you in writing of their intent to return items under DSR by the end of the 7th working day after they receive it, and the days start counting the day after they receive it, so it is actually 8 working days. They then have 30 days to return it. Over and above that timescale you do not have to offer anything further by less and if the customer has done all of this you are not allowed to charge them fees of any kind. You even have to refund the postage they originally paid you. You also cannot charge a customer a restocking fee after this time unless it actually costs you to put the item back into stock and you are passing on this exact same cost. Buying more stock and not having space for their returns isn't a reason to charge them unless you have to pay for storage. Definitely worth speaking to trading standards and even a solicitor as if you get it wrong it can be very messy indeed.