Damaged goods

Managing the return of faulty products is an issue that often leaves the channel divided — nowhere more so than in the Middle East, as vendors and partners jostle to define their roles in a process that is too important to be ignored.

Tags: Aptec DistributionJumbo ElectronicsRepairSeagate TechnologyUnited Arab EmiratesWestern Digital Corporation
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Damaged goods
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By  Piers Ford Published  November 7, 2009 Channel Middle East Logo

The role of Return Merchandise Authorisation (RMA) in after-sales service has always been troubled. Its very reason for existence - the acknowledgement that occasionally a customer has a problem with a product - is difficult for vendors to explain in a positive light.

For resellers caught at the customer interface and expected to react quickly to faulty kit, the process of realising a refund or a credit is often extended until so long after they have provided a replacement product, that returns are a constant drain on their squeezed margins.

Whatever strategy they adopt, vendors will always be damned in somebody's eyes. If they take post-sales support in house, they are very publicly accountable when the standard of any replacement policy falls short. If they appoint certain resellers as authorised service partners, non-authorised resellers find themselves directing customers with faulty products to a competitor, adding insult to injury.

That was Nokia's policy in the Middles East until this summer, when it announced that it was outsourcing after-sales servicing to two partners (Al Futtaim's Technoserve division and Axiom's Phone Care division), taking a tighter grip on post-sales service standards and brand protection.

Existing authorised service partners might feel aggrieved but for everybody else, and particularly customers, the clarity of the strategy and Nokia's robust move towards greater accountability promises to cast RMA in a less problematic light.

Outsourcing may increasingly be seen as the preferred option. Middle East distributors, understandably, would rather focus on their core business than carry the financial and logistical can for managing returns.

In Europe, a recent survey by maintenance specialist Comtek revealed just how seriously many of them are taking the RMA drain on their resources. More than 60% of distributors said they would terminate a vendor contract if returns were handled badly - although how many would carry out such a threat in these turbulent times is open to conjecture.

More than 80% complained of having to carry extra stock to compensate for a lack of local vendor repair facilities, and a similar percentage would rather vendors without in-country RMA facilities outsourced this function to a suitably qualified third party. The survey also revealed that the average turnaround for RMA and repair services can be as long as two months - a further indication of its status as a thorn in the side for the retailer or reseller charged with resolving the customer's problem.

"RMAs are always a headache for anyone, because when somebody is coming back to you with a faulty product they are angry or upset, especially if it is under warranty or it is relatively new," admitted Ali Baghdadi, CEO and president of Middle East IT distribution house Aptec.

"And most of the failures happen within the first 20 days of purchase, so of course there is the hassle of managing that. Somebody might demand their money back or an instant replacement. Can you imagine if they have a device that fails the day after they bought it, and then the vendor tells them, ‘send it back and we will call you in a month'?"

Baghdadi says proper and swift management of RMA is vital - but that it always constitutes an opportunity for improvement, something that JP Nambiar, head of retail at Jumbo Electronics entirely agrees with.

"Here, any RMA requests need to be handled by the respective product manager together with an inbound executive, as it needs formal vendor approval before acceptance," said Nambiar.

"This can take up a lot of time if you don't have the right processes in place. Can you make money from RMA? Quite the opposite! You can't make any money from RMA as a distributor. You are actually out of pocket until the returns process is completed, which can take time, while the customer gets their product replaced or a refund straight away."

Nambiar is critical of vendors who have long, drawn out processes that require endless follow-up with authorised service providers - something Nokia, for example, appears to have heeded - proof of sales and purchase, and formal approval from the local call centre.

"These processes could easily be streamlined by having trained staff capable of quick diagnosis and approval of RMA providing customer service," he said. "A simple change in operations would improve efficiency tremendously while improving overall customer satisfaction. We have watched these mistakes being made and learned from them, and we have carefully engineered our own processes to avoid them."

Aptec has also been through this learning process, to the extent that Baghdadi confirms the distributor is setting up a specialist enterprise to operate as a third party logistics services provider.

"To be honest, I wouldn't be very familiar with the exact [vendor] policies in our region but my team tells me there is a very good opportunity for us to at least manage the reverse logistics and RMA for some of the IT and electronics vendors," he said.

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