QuickReturns will focus its marketing efforts on e-tailers, catalog merchants and click-and-mortar stores selling common products with higher-than-average return rates. Revenues will be generated through return and exchange processing fees and membership fees.
QuickReturns will approach the returns market with the following competitive advantages:
Consumer marketing strategy
Two factors will alow QuickReturns to build consumer awareness of its services with less advertising than typical start-ups:
QuickReturns will have a website at www.quickreturns.net with information on the QuickReturns services, procedures, benefits to consumers, links to retailer partners categorized by product category, and a location finder linked to online maps. The site will be designed for easy navigation and access to company information.
QuickReturns media advertising will convey two key concepts:
Advertisements also will contrast the positive experience of returning products through QuickReturns against the potential pitfalls of returning products through other means. Marketing campaigns will be intensified around the holiday season, when the majority of returns occur. Radio, magazines, and billboards will be emphasized over television as the preferred marketing channels in order to realize greater return on marketing investment.
Retailer partner marketing strategy
Retailer partners will be approached once a relatively firm technology completion date has been set and a distribution partner secured. Business development and operations executives will be contacted directly at retailers that are best suited for QuickReturns. The table below outlines the desirable retailer partner characteristics.
|Sells merchandise with high return rates||More returns generated per retailer partner|
|Simple and ordinary products||Faster and more accurate inspections|
|Return difficulties act as barrier to sales||Looking for solutions to returns problem|
|Customer service focused||More likely to become QuickReturns partner|
Distribution partner marketing strategy
Striking favorable agreements with the proper distribution partners is critical to the success of QuickReturns. A number of attractive potential distribution partners have been identified. Soon after securing its funding and technology partner, QuickReturns intends to approach the senior management of these companies. Approaching potential distribution partners at that time will strengthen QuickReturns' negotiating position and minimize intellectual property risks.
In its initial roll out, QuickReturns will focus business development efforts on office superstores and parcel depots. Not only do these stores offer the shipping services necessary for QuickReturns operations, but they share synergies with QuickReturns customer segments. Consumer traffic accounts for 40% of sales for office superstores, and likely accounts for an even higher portion in the parcel depot market. Five chain stores have been selected as the top choices for QuickReturns partnership.
Initially, retailer partners will incur four different fees, as summarized in the following table, and discussed in detail below.
|Charge to retailer||Timing|
|Annual membership fee||Annually (instituted after year two)|
|Technology integration fee||At systems integration (abolished after year two)|
|Return processing fee||At returns processing|
|Product exchange fee||At purchases with QuickExchange terminal|
Annual membership fee
QuickReturns will charge each retailer partner an annual fee of $250,000, approximately the cost of a single 30-second network TV commercial. The annual fee will be waived in QuickReturns' first two years of operation in order to acquire a critical mass of retailer partners. This fee will be used to cover technology development and maintenance, liability costs, and marketing expenses. Payment of the annual fee will include:
Technology integration fee
In lieu of the annual fee for the first two years, QuickReturns will charge retailer partners a one-time $60,000 technology integration fee, intended to cover the costs of integrating the retailers' databases with the QuickReturns system. The fee is based on estimates of labor and material costs incurred by QuickReturns personnel who will be on-site through the integration period. The fee will be eliminated after year two, when it will be incorporated into the annual fee.
Return processing fee
The return processing fee will be incurred after each return transaction and will be based on the number of inspection criteria set forth by the retailer for a given product return. A base fee of $4.80 will be charged for each return handled by QuickReturns. The base fee will cover up to five inspection criteria, specified by the retailer, which QuickReturns agents will ensure are met before accepting a return. A surcharge of $0.50 will be levied for each criteria over the fifth.
Processing fee rates are designed to reflect the cost structure of returns. Returns with more criteria will result in higher liability exposure for QuickReturns because of the higher likelihood of human error. Returns with more criteria also will be more costly to distribution partners because of the additional employee time required to complete each transaction.
It is projected that retailer partners generally will establish higher numbers of criteria for products that are more complex and thus more expensive. In this way, the fee should correlate loosely with the product's purchase price. QuickReturns projects that retailers will choose to pay the base rate of $4.80 for 80% of products, and will choose to pay for an average of two additional criteria for the remaining 20% of products, resulting in an average fee of $5.80 for the latter group.
Return processing fees will rise by five percent per year, starting in year three.
Product exchange commissions
QuickReturns will charge a product exchange commission of 10% of the purchase price for purchases made through QuickExchange terminals. This commission is in line with the standard 10% to 15% commission that e-tailers now pay referring websites. For the same commission, QuickReturns offers greater value than the average referring website, by providing customers with a computer, Internet connection, and direct link to retailers' website.
To initiate and close sales, QuickReturns' top management will be personally contacting the marketing and business development managers of the selected list of target retailers. Customer service and quality control will be the key factors in determining the clients' decision to outsource their reverse logistics to QuickReturns. Sales and marketing efforts will be directed to ensure the ongoing relationships with such retailers.
Our sales revenues will be derived from three primary sources:
The following sales forecast is based on the following assumptions: