DealersEdge Professional Forums

Has anyone else out there noticed a proliferation of parts returns? It’s mostly wholesale customers who buy parts and return them the same day. This is happening more and more often. The excuse they give almost every time is “well, our customer backed out”. It’s not so bad if we stock the part but more often than not the parts are special ordered. I’m pulling my hair out (and I don’t have much left). What do you guys/gals do???

One of my good wholesale customers told me that there is a "trainer" for the aftermarket, that is telling them to not just get an estimate and availability for the parts. He states to just order it all that way the parts are already on the way or there when they sell the job, if you don't sell it send it back "no big deal". Their shop understands the crap we have to go through and does not do this, but I have another that does this quite often and now pays return charges.

If there is such a 'trainer' that is telling people what was said, that trainer must be on somebodies else's payroll. One of the best decision one could consider is the following chain:
1. The parts department and dealership is not a speculative bank for any body shop or wholesale customer.
2. Sometimes the customer makes a mistake or loses a deal; that happens "once in a while" if they are a legitimate customer
3. Don't let these customers play you like a fool.
4. Track the returns from wholesale customers. Any wholesale customer who returns an equivalent of 20% of their annual purchases per year is not a good customer; you are not their bank.
5. The good customers who run their businesses WITH you and play fair; keep them.
6. Institute a 20% return penalty for those who habitually abuse your business; refer the bad customers to your 'favorite' competitor; them them deal with the abusers.
7. Grocery stores don't take back broken packages and half eaten food; why should you?
8. The wholesale business might justify a larger inventory, which in turn is better for your in-house availability, but in the long run it is a volume margin type of deal. a low margin will never justify a high volume if the sales are coming back to you. Seems like the factory return policies do not want to participate in this business; hence the slow disappearance of the return credits to factory.

Just a thought for you parts managers to 'chew on'
Mike

when i was on R&R i set up sales territory for my wholesale customers. one for bodyshops, one for mechanical and one for other dealership of the same line. set up is done in 2337, then in 2120 you go to the 2nd page and put in the sales territory number you set-up for the type of customer to track. now you can go to 2216 and run sales reports. it will show gross purchases GP% GP dollars and returns dollars and %. i used this for 20yrs and it saved me a lot of problems . it been a few years since i have used R&R so i hope they still have this set-up

We recently eliminated wholesale deliveries; partly due to this and partly due to our dealer competitors offering MSRP - ~36-38%. Working with an 8% margin obviously does not make any sense. If you are part of a dealer group with multiple franchises that can consolidate expenses/deliveries, wholesale MIGHT make sense and be marginally profitable. Or; if you're in a non-metro area where there isn't much business for your own shop and not much dealer competition, again it might be marginally profitable. Bottom line; why assist your competition to sell to your customers? You make ~40% in your own shop and ~15% if you're lucky selling to the outside (which requires much more effort, resources, and management.) When we eliminated deliveries (pick-up only, still have accounts and discounts,) we weeded out the problem customers without even having an uncomfortable confrontation, made less gross but kept more net, phones don't ring nearly as much (which lets us concentrate on our techs,) we don't waste time giving out info for $0 sale, don't chase receivables, don't have returns/obsolescence issues, etc... I highly recommend pulling the trigger on this; even if the THOUGHT of doing so has crossed your mind, you're probably not making the dealer any extra net with wholesale at this point. It's hard to separate these figures that are affected on the financial statement, but you know how the dept really works and what is at stake.

One of my great wholesale clients let me know that there is a "mentor" for the post-retail, which is instructing them to not simply get an assessment and accessibility for the parts. He states to simply arrange it all that way the parts are as of now in transit or there when they offer the employment, in the event that you don't offer it send it back "no major ordeal". Their shop comprehends the poop we need to experience and does not do this, but rather I have another that does this frequently and now pays return charges.