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When to consider a return and exchange policy

A retailer can build a good selling reputation by having a sound return and exchange policy in place
By Roselyn Villa |
When to consider a return and exchange policy

Retailers face consumers directly and this places a great responsibility for them to ensure that the products they sell are of good quality, reliable, and safe.


To thrive in the business, a retail store must develop a reputation for selling quality products. After all, consumers look for value for money these days, and no one would patronize a store notorious for selling defective wares.

One way to build a good selling reputation is to have a return and exchange policy in place. According to the Department of Trade and Industry's Consumer Welfare and Trade Regulation Group, a sound return and exchange policy reflects a retailer's genuine concern for customer satisfaction as he consciously upholds the quality and reliability of the products he offers for sale.

Taking care of the customers is one crucial strategy many retailers overlook or take for granted. A satisfied clientele has a direct effect on the business's bottom line.  



So how does a retailer formulate a good return and exchange policy? He or she must set the conditions under which he is willing to accept a return or an exchange of goods. He can choose to accept only those products with factory defects, which the Consumer Act mandates, or he can choose to do more, such as accept returns or exchanges even if the products passed muster.

The Consumer Act places the responsibility on the seller to act on the buyer's behalf whenever a consumer product is found to be defective. If a warranty covers a product, the retailer should present the warranty claim to the manufacturer or distributor at no cost to the buyer. The retailer should also shoulder the costs of honoring the warranty if the manufacturer or distributor fails to do so. In these cases however, the retailer can proceed against the manufacturer or the distributor. The retailer must also bear the cost of replacing, repairing, or refunding a defective item when the manufacturer cannot be identified or when the retailer did nothing to preserve perishable goods.

The second consideration is the period that elapsed from the date of purchase to the time the non-defective product is returned. The retailer must decide on a reasonable time frame depending on the item he's selling. Most establishments set a seven-day period. This condition does not apply to products with hidden defects, since some can appear perfectly fine at the start and then suddenly malfunction after a while.


To guard against possible consumer abuse of this policy, the law mandates businesses to repair, replace, or refund only products with hidden defects. Replacing items in good condition is completely voluntary, and retailers may do so if they think it will build good customer relations.

But how does a storeowner prevent fraudulent consumer claims? For instance, defective products bought from another establishment, or those who would demand a replacement when it was they who damaged the product but will not admit doing so?

A good way to prevent fraudulent claims is to make it a standard procedure to have the customer check or test the item before he or she pays for it. This way all defects can be discovered before the customer leaves the store.

Then have your sales personnel and cashier remind the customer to keep their official receipt, as this proves strongly that the items were bought from your store. Nevertheless, a retailer must not reject outright a demand for a return or an exchange if the customer cannot show an official receipt outright because he could present other proofs of purchase.

After setting the conditions for his establishment's return and exchange policy, the retailer should communicate this to the entire sales personnel so they would know what to do when a customer comes demanding a replacement. He should also ensure that his sales force is able to communicate the policy correctly and clearly to the customers to prevent any misunderstanding and future problems for the establishment.



This article was originally published in the November 2006 issue of Entrepreneur Philippines.

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