Walmart's order return rate is increasing. As a product manager, what things would you look into to isolate the problem?

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Walmart's order return rate is increasing. As a product manager, what things would you look into to isolate the problem?

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Tushar · Answer 1 · 2020-12-22T14:56:36+0000

Give me your feedback on my framework for answering this problem solving interview question.

Clarify:

Is this related to a particular geography? IVR: USA
Is this increase in return rate gradual or sudden? IVR: Gradual
Does the increase correspond to any specific channel: offline sales, online sales (app, web), partners (instacart)? IVR: We do not have that information
Is it related to a particular product category? IVR: We do not have that information
Has the way we measure return rate changed recently? IVR: No
Any changes to the return policy say from 30 days to 90 days etc. ? IVR: No
Does return includes exchanges as well? IVR: No

ok great. So Walmart return rate is gradually increasing in the USA and there has been no changes in the way we measure this metric or policy.

I would check the absolute numbers of return as well so understand if the sales have decreased and the return numbers stay the same. This will keep increasing the return rate if the most loyal customers are not purchasing from Walmart anymore.
I would check the product categories to get more granulaity. There may be some newly launched or bad batch categories that may be feeding the return rate.

Internal Factors:

Bad product batch or category that was launched. I would check if its the in-house great value brand or other brands that may be causing it
Bad PR: Increasing sentiment against Walmart in the community that affects SMB retailers. In this case, we may also see directional downward shift in overall sales as well
Any technical issues related to pricing and now customers are able to find lower prices for same product
Policy changes: such as removal of price match post purchase, sudden removal of installment billing

External factors:

New competitor launched with promotions and lower prices of similar product categories that Walmart sells. This will impact sales as well.
Political activists triggering a movement against walmart and suggesting to ignore it
Seasonality: This increase is gradual this may not be possible
Major catastrophic event affects economy and livelihood. This will also impact sales

I will check the return rate/absolute nos on basis of product categories, demographics, channel (online/offline), delivery times.

Please provide your feedback. THank you!

amitbp · Answer 2 · 2020-09-28T15:05:17+0000

Clarify -

By return rate you mean, the items bought from walmart and returned later ? - Yes

I would like to do an internal analysis and an external analysis in order to get tp the root of this problem ?

Internal Factors
1. Data Quality - Validate if data is correct, check multiple sources and reports
2. Time - When did we start seeing this issue ?
3. Seasonality - Do return usually increase this time of the year.
4. Percentage of Sales - Are returns proportional to sales i.e has the sales increased recently, maybe because there was an offer ?
5. Product or Product line defects - Any known product defects recently which is leading to returns ?
6. Channels - Are the returns coming from any particular channel ? like ecommerce ? Walmart App? Store ? or third parties like Instacart ?
7. Customer Care/Sales - Check with customer care or sales for their input on any particular product or customer insights ?

External Factors
1. Geography - Are the returns coming from any particular regions ? like countries etc ?
2. External Incidents or News - Ex - COVID rumours increased grocery sales but later customer might be returning those products
3. Competitors - Any significant product launch or release by competitors recently thats leading to the return of our products.
4. Compliance Laws and Govt Announcements - Monitoring the local govt announcements , news etc that's leading to the product returns.

I think by now, I know that the increase in return rate could be because of any of the factors or multiple factors.

Pranajit Singha chowdhury · Answer 3 · 2020-07-11T13:40:59+0000

In order to isolate the exact problem, below are the questions that have to be clarified:

1. Is the order return rate increasing over time or it’s sudden?

- Assumption is that the order return rate has been increasing over time.

2. Is the return rate increasing across all categories of products or only across certain categories?

- Considering the reputation of Walmart, it is highly unlikely that orders from all categories would be affected. So assumption is that only one vertical of product category has been affected.

3. Is the return rate increasing across all demography (Age, gender, country and income)?

- Assumption is that it has been increasing across all demography.

4. Has any new competitor entered the market?

- Assumption is that no new competitor has entered the market, although existing competitors are still there.

5. Has the price of the similar products selling by the existing competitors been changed?

- Assumption is that there has been no change in the price of the similar products by other competitors.

6. Has there been any change in the details (Product specs and price) of the product, the return rate of which is increasing?

- Assumption is that nothing has been changed in the product details part.

It is highly likely that the quality of the product has been hampered. And to make sure of it, a batch of the product should undergo a quality check. Also, it is important to go through the customer feedback at the same time.

Amit J · Answer 4 · 2021-11-27T04:11:01+0000

Clarifying questions:

1) Are those returns were purchased online or In-store? - Assume both

2) Any particulra city or store where returns are increasing - Assume all US

3) Return rate - is it like increased by 2x, 3x? - Assume returns are doubled

4) Is it not seasonal , i mean during Holidays sales return are higher - Assume seasonality effect is already considered

5) Period - is it over last 1 quarter or an year - Assume last 2 quarters

6) Are return majorly on 3rd party sold through walmart or walmart direct goods. - Assume increase in both categories.

7) Any paricular line of business which has major increase like Home, Kitchen, Electronics, Fresh etc - Assume % increase in all categories

My problem statement is to find out why returns are increasing in walmart in Online/In-Store purchase in US in all line of Business over last 2 quarters. In order to do so, I will look at both Internal and External factors and recommend solutions.

Internal:

1) Any recent change in UI, new feature or bug causing different items to ship vs what customer ordered or less photos or knowledge of product online or higher charges on Credit card.

Recommendation - I will deep dive with engineering team and provide hot fix or roll-back feature depending on situation.

2) Online vs In-store price discrepancy - Are products returned have different pricing online or In-store or even with competition.

Recommendation - Work with operations/sales team to provide similar and competetive pricing both online or In-Store

3) Change in packaging - Any recent change in vendor which cause item to not be durable or break or not working

Recommendation - Work with Supply team to test the packaging before it ships out

External:

1) Any change in Delivery method for example longer shipping times vs promised earlier

Recommendation - Get insights from Delivery team to check which 3rd party vendor UPS or Fedex or USPS taking longer times and fix it.

2) Packaging method - Any change in packaging method by 3rd party Deliveries causing items to not come in right condition

Recommendation - get insights from delivery team to check which 3rd party vendor has issues and fix it.

3) Competition - Retailer/E-commerce has better pricing on products or has better bundling offers or any new feature launched by them like Amazon subscription method which reduces the cost of products over time and delivery cost.

Recommendation - Check with Competition team to get insights on new feature, pricing , bundling and accordingly come up with comp winback action plan.

4) Any environemental issues or Hygiene issue with those walmarts during COVID-19 causing customers to return the products

Recommandation - Ensure proper COVID-19 hygiene saniation is mainatined and see how environemental issues can be mitigated with management team

Success- Metrics:

% decrease in Return -rate and come back to original return rate