What Is an RA?
How Return Authorization Forms Can Help Your Retail Store
You will always have some products that just don't sell. Whatever the reason for it, dead inventory takes up needed space on the shelves in the stockroom and in the showroom. Plus, the longer a style sits on your shelves, the more a customer is going to notice it and think you are not getting fresh stuff in. It's amazing how the one "eyesore" of a product can give the impression that a whole collection is lacking.
The best way to solve this problem is with an RA.
What is an RA?
RA stands for Returns Authorization form. Sometimes referred to as an RMA (return materials authorization) or RGA (return goods authorization) the purpose is to authorize and track inventory returning back to its manufacturer or wholesaler. In some cases, your wholesaler may require you to return the goods back to the original vendor or manufacturer, and in this case, you would use an RTV (return to vendor) form. But the purpose is the same.
The RA serves as a control mechanism for vendors with retailers. First, it ensures that products stay sold. For example, if a retailer could send products back for credit to a vendor without authorization, the vendor would go bankrupt paying for the retailers' mistakes. The RA process is about relationship. A vendor will determine the issuance of an RA based on a few factors:
- Amount of wholesale business you do with them
- This is a big one. A vendor needs to weigh the ROI in issuing you an RA. Are you going to buy more merchandise? Are you a good retailer who made a bad decision on this product or are you not a good merchant?
- Age of inventory
- The older the inventory the less likely you are to receive an RA. After all, the vendor needs to find another place to sell it. Make sure you are requesting an RA before the end of the season. It may not get processed until the end, but the vendor knows you are on top of your business and is more lily to say yes
- Known issues with the product (defect or fit problem)
- Sometimes there is an issue with the product that impacts the sales. For example, in my shoe stores, we often had a shoe that fit poorly. The last (form used to make the shoe) was off in its dimensions and the size 10 really fit like a size 9. Other times it may be a defect in the product.
- Color or style not selling anywhere
- Even a vendor can make a bad call on a style or design. If you have the right relationship and a good vendor, they will even contact you about this proactively.
Typically, a vendor or wholesaler will issue you a credit for the return goods. This means that you can use it for future purchases. It is very rare that you will get actual money back. But if you are ordering fill-ins from this vendor on a regular basis anyway, you can always use the credit. Also, it is common for you to pay for the freight back to the vendor. But ask for them to pay. It is worth a try and sometimes (depending on how much business you do with them) they will pay for the return freight — especially if there is a known issue with the product.
Before adding a new line to your retail store, find out what their RA policy is. Are they willing to work with you?
Some vendors simply have no RA policy. The problem is all yours. This happens mostly by a vendor who imports all of their goods and has no outlet for the products if you return them. You also want to know about co-op funds and other ways they will help you sell their merchandise. The more they are willing to work with you and support you, the more invested in them you should become.
How Do I Get an RA?
First, build your case. Before you even contact your sales rep about an RA, you need to justify the need for one. Be prepared to show how similar items have sold and these did not and why. Second, contact your sales rep for the products. This may be a rep from the vendor directly or a wholesaler who sells the product for them. Your chances of getting an RA go up dramatically if you are dealing directly with the vendor.
When you contact the rep, make sure you are aligned on the "terms." For example, who is paying for the freight? Are you getting full cost as a credit or partial? Will they ship the new goods before they receive the old ones? If they want to get the old before the new, see if they will give you extended dating on the need purchase order.
Return authorizations can save you money. Remember, cash is king in retail and if you cannot get an RA, then you are left with a lot of markdowns. Always try for the RA first. But only try if you have a justified case and not to fix your mistakes or errors in buying.