Real Issues. Real Answers. Managing returns

Real Issues. Real Answers. Managing returns
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With lumber prices near record highs, and many other materials in short supply, it’s more important than ever that LBM dealers have smart return policies in place. For this month’s Real Issues. Real Answers survey, a Kentucky dealer asked other LBM pros to share their best practices when it comes to handling product returns. That’s why we asked our readers to share their experience with managing returns.

Thanks to the 118 respondents who took the time to complete to our survey, which asked just one question:

“High lumber prices have us taking a fresh look at our return policies, and we’d like to know what other dealers are doing. Do they charge restock fees? If yes, what’s the threshold where restock charges kick in? What about material picked up from jobsites—do most dealers pick it up at all? If so, is there a charge? Thanks in advance for the answers.”

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Responses from lumberyards and specialty dealers

“We haven’t charged restocking fees for materials in the past, and with the scarcity of available materials, every resalable sheet or stick is precious so we have been taking them back for full credit if we can resell them. If we cannot resell an item, we do not accept it for credit. This applies to material picked up at jobsites (which we do) or to material returned to our yard by customers.”

“We charge a 10% restock fee on material returned in good condition. Special order return charges equal the distributor return charge plus 20%. We offer no credit on junk, but we will pick it up and repurpose it.”

“We charge a 15% restocking fee to cover the time it takes to look up invoices and restock the products that show no sign of use. If we send a truck and driver to pick up products at the jobsite, we charge a pick-up fee to be determined per job. This practice has deterred some contractors from over-ordering.”

“Stock items can be returned, but special orders receive a 15-20% restock fee if our suppliers will take it back. If not, the customer keeps it.”

“If you pick up from a jobsite, you need to charge a restock fee.”

“We don’t charge a restock fee or charge to pick up the materials. It could be argued against us for shipping too many materials. It’s best handled with communication to reduce future job overages. Credits are just as important as sales and should be treated as such. Too many customers can be lost from poor handling of the credit process.”

“Returned goods are becoming a real problem as customers are not keeping anything left over anymore. We charge 15% for returned materials and 30% on returns that we pick up at a jobsite. Of course, the material must be in good condition and re-sellable. If a customer returns something the same day and trades up for a longer length or a more costly item, we’ll waive the restock fee.”

“On materials returned by the customer we do not charge a restock fee, but we are very particular about making sure the materials are in re-sellable shape. We either require a receipt or we must be able to find the original invoice in our system so that the credit pricing is correct. We do pick up materials at the jobsite and have a range of restocking fees that are applied from 5% to 20%, depending on the distance from our yard, how well the materials were staged for us to pick up, and who did the take-off on the initial order. We have a few large customers who have negotiated their pricing to include free returns with no restock fee, and we have a few trouble customers who always get a 20% for materials they return. We try to keep it flexible, but it often becomes a major source of contention.”

“We are located in East Texas and we have never charged a restock fee on stock material lumber. We have definitely tightened up on special order returns, trying to pass the cost on to the customer when we can prove fault. We have always offered pickups within 48 hours, it’s one of most powerful pitches when trying to get new business. While I cannot see us charging a restock fee, we have a small service fee ($14) that we apply to every delivery ticket, and I could see us moving that fee to credit invoices as well.”

“We do jobsite pick up of materials for each of our customers. We ask our account managers and sales staff to help guide and monitor the materials sold and delivered to a job. We do not have a regular restocking fee, but on occasion our store managers might charge a small fee at their discretion. Materials picked up and returned must be clean and ready to resell. Also, these materials returned are credited at the original invoice pricing.”

“I do not pick up returns unless we are delivering an order. Our stocking fee is 20% plus $65 per hour to mess with returns.”

“We do not charge a restock fee on salable stock items that are returned. Non-stock items that can be returned to our sources have a restock fee.”

“We are a customer service-based lumberyard (we don’t sell on cost). This means that we are always striving to serve the customer. We do not charge a re-stock fee unless the product is a special order and the supplier charges a re-stock fee. Material will also only be credited at the same price that it was charged out at. The name of the game is, of course, compromise.”

“We are not charging a restocking fee on any stock product purchased from us. We have become more vigilant and are inspecting every board before we give credit. We do not collect restocking fees, even if we pick the material up from the job site. We run at a healthy enough margin to cover the costs of sending a driver and extra help to do pick-ups. Our customers are also helping us by stacking materials neatly and with easy access for returns.”

“We charge 20% restock on all returns plus a trip charge. All material must be 100% resalable. Special orders are not returnable.”

“We charge re-stock fees on all returns that have been estimated by the builder if we have to pick it up. Usually, it’s 15%. If we have estimated the job, we pick up and do not charge a re-stock fee.”

“Our customers are almost exclusively high-end custom builders. If it’s a good customer and/or a product that is in short supply and is in a condition that the customer would accept the exact same material back on his job site, then sometimes we will not charge our typical 25% restock fee and we’d also reverse delivery charges. If the material is in less-than-saleable condition, we will not issue credit. On occasion we have issued credit at a higher restock charge of 50% plus reverse delivery charges to maintain a solid relationship.”

“We don’t charge restocking fees, but we have to go back and make sure what the customer paid for the original material, and not the price the product is right now. We do pick up material, but we also charge a delivery fee for having to go pick it up and it has to be in a neat pile so all we have to do is pick it up.”

“We do not normally charge a restocking fee unless we deem it excessive. We have, on a few occasions, picked up returns but we do charge a delivery and restock charge at that point.”

“We only charge a restock fee if the vendor we are sending it back to does. If they charge a 20% restock fee, we charge a 25% restock fee. We always increase it by 5%. We don’t charge a restock fee on stock items. If we pick up stock returns and there is any damage to the material, we don’t give the customer credit. If the customer wants us to pick up returns, we will. And if there is any mud on a box or any question if it would be hard to sell in the shape it is in after sitting at the jobsite, we will pick it up and not give the customer credit.”

“If I sold replacement windows (custom sized) and the customer had one left over after a job, there is no way on earth I would accept it back and refund his money. I feel like it would (or should) be the same way with lumber, especially since what is left over has been picked through to cull out any inferior pieces. I realize lumberyards do sometimes have to take lumber back from certain customers, but it’s pretty tough, especially if you don’t get the gravy orders.”

“We are a contractor yard, not a DIY yard. We do a final pickup on each jobsite and give our customers 100% credit on all re-salable items. If the framers have walked all over the lumber, or it has been cut, or has nail holes, then we leave at site. If the material is covered, and stacked on breakers, so we can pick it up with our forklifts, we give full credit. The salesmen are responsible for educating the builders and framers. The builders embrace it; the framers not so much.”

“We pick up materials at the jobsite for customers with no return charge. The biggest problem happens if the material is not resalable. Then we sometimes return it to the jobsite. Two trips for no sales.”

“Special orders or non-stocked item have a 25% restocking fee. We will pick up materials for return and charge a delivery fee.”

“We only charge restock fees if our vendor charges us, in some cases a return from many months ago may be charged a restock fee also. These days, dimensional lumber that is returned was often sold at a lower cost than we currently are charging. The customer is refunded the original sale amount. If the product is resold at current prices, that is an increased margin for us; when lumber prices come down that will be a different story! We do pick up from jobsites, sometimes we charge a standard delivery fee.”

“I typically do not charge a restock fee if the customer brings back the material. I feel it is a wash if they take their own time and gas to bring it back. By then, it is equal to my people checking it in and putting it away. If we have to pick it up on a jobsite, I will typically charge a 15% restock fee.”

“We have not changed our return policy since the pandemic and high prices took hold. We charge re-stock fees on special order products that have to go back to suppliers. We pick materials up at job sites and apply delivery fees when applicable.”

“Our yard’s policy is to pick up and write a full return on any item that is a stock item that has been protected from the weather and other damages. Our customers are required to separate materials to be returned from those that are yet to be used or damaged. Special orders are not returnable unless our supplier agrees to accept the unused items and our customer agrees to pay any restocking fee our suppliers may require.”

“We still pick up from jobsites but only give credit if in resalable condition. We do not charge restocking fees.”

“If you do the takeoff, don’t charge a restocking fee except in the case for changes on the jobsite that caused the overage. If you don’t do the takeoff, charge a restock fee for materials returned. Picking up from jobsites is a value-added service that I deem essential to a well-rounded customer/ client relationship. We have no charge for this beyond a restocking fee, if applicable, within pre-defined delivery geographic areas.”

“If the vendor will take it back, we charge whatever their restocking fee is. We are working on getting full payment on special order items. All contractors and active charge accounts are paying 50% down. All cash customers pay 100%.”

“We pick it all up for free. That is a part of our service. We do not give credit for damaged products (something that we cannot resell as-is). We have multiple ways to salvage some value from damaged goods. We watch the return percentage of all of our customers and address the abusive situations on a case-by-case basis. Sometimes, we have increased our selling prices to build in extra costs for certain customers. If they quit using us, in some cases, we are ok with that.”

“Currently we do not charge a restocking fee but are also looking into charging a fee. We would not charge if customers returned materials themselves, and we’d charge 10% if we have to pick up.”

“Yes, returned material must be resalable. Most special orders are not returnable. We will charge a 25% restock fee on most products.”

“We do allow returns from our customers. Stock items returned in salable condition are given full credit without a restock charge. We will accept returns of special-order items if they can be returned to our vendors. Restock fees apply to these returns. We do not except returns of special-order items that cannot be returned to our vendors. We will pick up returnable items from our customers jobsites.”

“It depends more on whether or not the overage was our fault or the contractors more than a dollar amount. If, for example, one of our employees measured a roof for a shingle job and was long on shingles, then no restock fee is charged (although that employee is usually the one sent to pick them up). However, if the roofer called and ordered way long on shingles, he is liable for the restock fee. We do pick up materials at the jobsite for no extra fee as long as it is within our normal service area (10-15 miles), is somewhat organized and ready to be loaded onto our trucks. This keeps both employees and contractors from just mailing it in, which helps keep overstock down and product turnover high.”

“We tend not to make a special trip for returns. We will, however, take items back if making a delivery to the site. We seldom restock unless it is just egregious. Then we do not give credit for materials that are not salable.”

“We have not charged for returns in the past and do not have an immediate plan to do so, but with the builder segment we are dealing with, it may be in our future. Subs are running all the jobs now for the most part and all they care about is having enough on site to not run out of material, thus our returns are getting larger and larger. I think we are all facing a very sticky situation because our sales force is not what it used to be and most of them seem to not accept any responsibility for heavy returns.”

“We do not charge any restock fees. We have had a very lenient return policy over the years but are looking at strengthening it. We basically accept anything resalable no matter when it was purchased. We pick up 90% of returns ourselves from jobsites and most of our builders do a good job stacking it neatly and sending pictures beforehand so our guys know what they are picking up and where it is at. Our only stipulation is that we don’t schedule returns, we will pick up when in the area only.”

“We charge a 15% restock fee for stock materials returned to our yard within 30 days. We charge a 30% restock fee for materials picked up from jobsites, and a minimum 30% for special order returns. There is no minimum threshold. Exceptions can be made by our sales manager on a case-by-case basis. We have not modified our policy due to increased lumber prices.”

“Yes, we charge restock fees. If we did the take-off then no, we don’t on those orders. We charge a 20% restock on stock items and 30% on special orders and only get credit if and when we get credit from vendor. Returns are written and picked up within five days from job starts. We do offer clean up services for items that we do not give credit for. These services are rare but will do for a negotiated price.”

“In our business we charge a 25% restocking fee for all returns. No matter how small the sale, there are always expenses involved, even on the return. A return at zero profit still uses labor and resources. Returns picked up from a jobsite are charged 25% minimum, and additional depending on where product is staged for pickup. If staged in easily accessible location and access is sufficient, 25% might be all that is charged. If product is scattered and not easily picked up, the restock fee goes up. With employee wages, benefits, fuel, vehicle insurance, worker’s comp insurance, material costs, and general costs of doing business being at unprecedented levels, returns are a losing proposition. Even with the small restock fees we charge.”

“Any item that we stock, we return to our inventory without a restock fee. Sometimes we pick up returns from job site, other times contractors or homeowners will bring them in. Mostly this depends on the length of materials coming back. We try to pick up when we are doing the next delivery. If an item is special order and we cannot return it to our supplier, we forewarn customers that it is not returnable. If we can return but with a restock to our supplier, then we pass the restock fee on to the customer. We do constantly remind customers that the goods must be in salable shape and in clean dry boxes.”

“We have not addressed re-stocking charges. This is a good heads up on a process that needs attention.”

“Most of our builders bring us their returns just before the end of the month. We pick up very little at job sites. We don’t charge for returns as they haven’t been a problem. Another solution to returns is to talk to the people doing the estimates; if they’re constantly over-shipping it’s going to increase returns.”

“We are having the same questions about this issue. At the present time we are not charging anything for pickup and yard returns of material. However, it really needs to be addressed as it will become a bigger issue as market goes through these extreme ups and downs!”

“In light of the fact that there is such a shortage of material, we have waived our restock fees and jobsite pick-up fees. But we don’t go out of our way unless we desperately need the material for another customer. If we are close to the jobsite with another delivery, we will back-haul the return. It is the responsibility of the customer to keep the material safe until we arrive. We instruct our drivers to identify material that cannot be returned for resale and that they should not pick it up. Credit is issued only when the material arrives back at our yard for counts and further inspections. As always, the material must be in the same condition in which it was sold, and the credit is for the original purchased amount only.”

“This is a case-by-case decision. For really good customers, we never charge. For the average customer we charge maybe 10% and sometimes nothing. For the occasional customer where it’s something we have to pick up and it’s difficult, we’ll charge 20%. These are called restocking fees. We do not separately charge a pick-up charge, just a restocking fee. If it’s something that’s damaged, we will pick it up but do not give credit and we call them and tell them. Dirty or broken stock, same thing. The instructions to the drivers are to pick it up and the yard manager will make the decision whether it’s credit or no credit. The driver does not make that decision. Note, again, we call the customer and tell them. No hard and fast rules, just case-by-case.”

“If it is a stock item that we have, we don’t charge a restocking fee for it, but if it is something that they want returned and the supplier assesses a restock fee to send it back to them, then we add the 25% restock fee.”

“We accept stocked items for return and issue refund or credit for the amount paid at time of purchase. For special order items (non-stock), if the vendor charges a re-stock charge, we pass that on to the purchaser. We do pick up material from job sites and try to coordinate that with another delivery to, or near, the particular jobsite.”

“Yes, we take returns if it is on stock items and we charge 10% if we pick it up and there’s no charge if they bring it back. We do not give any credit on anything that has to be returned to a vendor until we get our credit from the vendor, then we also pass along their handing charge.”

“We do not charge any fees. It is the customer’s responsibility to get the material back to us. We do not do pick-ups.”

“We pick up returns and credit back only those items that are in ‘as new’ condition. Other, lesser-quality items go into ‘farm packs’ and sold to the general public.”

“We charge 5% for any lumberyard products brought back by the customer, and when our truck picks up materials at a customer’s jobsite, we charge 20% with a minimum charge of $75. Materials are inspected before credit is issued to be sure material is in good, salable condition.”

“Yes, we charge for going to the jobsite to pick up unless there was an error on our part. We only give credit if the material is in resalable shape. If a customer brings it back, we inspect it in the yard before giving credit. If the purchase is over two weeks old, it may have been damaged or warped on the jobsite.”

“Charge a re-stock fee if material cost (pre-tax) is $400 or less.”

“No restock fees. It’s either 100% refund (re-sellable stock items, or returnable special-order items) or zero refund (damaged/unpackaged items, or non-returnable special-order items). There’s a $20 fee for pick up at a jobsite.”

“Our policy is 60 days for active inventory returns. Direct from vendor orders are no returns allowed as we don’t stock them. We charge for material return pick-ups based the equipment we send to the jobsite.”

Responses from wholesale distributors and manufacturers

“It’s difficult to know what the correct thing to do is regarding material returns. I don’t believe that it should be a cost of doing business. Certain products should be one way only, and some products can and should be allowed return with a restocking fee. Too many times I’ve seen how material gets treated on the jobsite with the builder/contractor fully aware that the material is overage. As long as a restocking fee is communicated properly it should serve as a deterrent to returning material in most cases. 15% is not out of the question on stock material, and correctly ordered S/O should be omitted.”

“We have no experience with returns. But returns need to be segregated to get an accurate count and cost. The best way to receive returns would be an easily visible way to tell what is a return and what is not. The easy way to do this is to use a different colored woven banding product. This makes it very easy to tell what is a return and what is not. Having a driver’s kit in every truck makes this easy. We manufacture the bulk of our woven strapping in white while our driver’s kit has the orange colored woven banding in it.”

“No restock fees on stock items is part of our service platform. We have found that contractors who face restock fees from competitors continually under-order, causing lost time on the site with additional travel to pick up missing product. Our story has been to order a little long and anything we stock and can resell will not receive a restock. It has been a strong selling point.”

“Return products are charged 20% (minimum $20), lumber items are charged 30% (minimum $30). The first time we receive material returned in poor condition (not resalable), we re-deliver back to the customer. The second time, the sales rep is required to inspect and authorize all future requests. When we have conflicts, it’s usually about returning composite decking.”

“We have a strict 30-day policy with a 15% restock on stock items, period. Absolutely no returns on special order or altered stock items. No one really complains because we have been doing it for 75 years with virtually no exceptions. Sometimes it is painful, but if you treat everyone the same you won’t have problems. Stick to your policy and make sure it is known to everyone! Don’t let your salesforce try to bend the rules in hopes of future sales, which never seem to materialize. The excuses are the most hilarious: ‘It’s my best customer.’ ‘We ordered extra in case the customer screwed up.’ ‘You can sell it to someone else, can’t you?’ and on and on.”

“We are a distributor and have had no requests for returns, thankfully!”

“We are a distributor, not a retailer, but we routinely charge most of our customers a 25% restocking fee. We insist that the material be returned within 60 days of purchase in clean, resalable condition. If the item(s) were special ordered (not part of our normal stocking inventory) or remanufactured in anyway, we do not accept returns. As always, there are exceptions to these rules which we handle on a case-by-case basis. For example, if a shipping error occurred and we are at fault we obviously waive restocking fees. If the customer habitually orders too much, we have on occasion increased the restocking fee to greater than 25%. The bottom line is this: handling an order twice is expensive. If we take materials that we are shipping to a dealer or jobsite back and have to handle it twice, we deserve to get paid for it. Obtaining restocking fees is part of a culture that has to be instilled in your staff and constantly reinforced. There is no minimum threshold, the policy is effective on every $1 returned.”

“There’s a 20% restocking fee and customer pays for the return shipping. We attempt this on all customers and yes there is give, based off reasons for the return. On 90% of returns, some fee is applied.”

“As a wholesale distributor, we began charging a restock fee from retailers that do not have a stocking program with us. Our theory is that a pick-up will require a special stop, versus a normally scheduled run. We have not yet imposed the restock on retailers that have a program with us, even on special order materials.”

“We’re not picking up from jobsites.”

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