Unbilled Size-Variant Exchanges और Customer Return Revenue Loss

Definition

Footwear retail exchanges are high-frequency but low-margin events. A customer buys Size 9 Sneaker but finds it too tight; exchanges for Size 10 at same price. In manual systems: (1) Inventory decreases for Size 9, increases for Size 10 (no sale/return entry). (2) Service charge (₹100 exchange fee) is NOT billed because system has no 'exchange' transaction type. (3) Returned Size 9 is held in 'damaged/return' bin; no automation to re-list at 80% markdown after 7 days. For a 10-outlet footwear chain: 500 exchanges/month × ₹100 service charge = ₹50,000/month unbilled. Additionally, Size 9 returned but not re-cleared promptly incurs carrying cost (₹50/unit/month × 50 units = ₹2,500/month). Over 12 months: ₹50,000 × 12 + ₹2,500 × 12 = ₹6.3 lakh revenue loss. Compounded by multi-location returns: Outlet A receives return for Size 11 Bridal; Outlet B has high demand for Size 11 Bridal; no system to auto-route returned item to Outlet B. Result: Size 11 Bridal held 30 days, then marked down 40%, losing ₹800–₹2,000 per unit.

Why This Matters

The Pitch: Footwear wholesalers in India waste ₹1,00,000–₹5,00,000 annually on unbilled exchanges and delayed clearance of returned inventory. Automation of exchange-as-billable-event and real-time return-to-resale tracking recovers 2–5% of potential revenue.

Affected Stakeholders

Sales Associate (exchange processing, missing service charge), Store Manager (return inventory tracking, delayed clearance), Warehouse/Logistics (manual return allocation, no demand-based routing), Finance (revenue recognition, unbilled service revenue)

Related Business Risks