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In: Operations Management

Why do Cosmetics Companies accept returns from Retail stores with no penalty? Include perspectives from the...

Why do Cosmetics Companies accept returns from Retail stores with no penalty? Include perspectives from the entire channel of distribution, including manufacturer, the distributor, the retailer and the consumer.

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Expert Solution

Cosmetic companies sell their product via a retail store and it cost them more as retail store usually take the product at a lower cost and sell them. usually, companies have to sell more products in retail stores then personnel selling or selling online or through small shops to earn a profit. If retail stores return the cosmetic product they take it back without penalty and hence save back cost as already they are losing by selling there they have to sell more products to cover loss to earn a profit. posing a penalty for products for returning from a retail store will be negative feedback as retailers will try to the ovoid cosmetic product as if not sold they have to bear the extra cost in them, also to market, a product retail store is the best way to earn visibility.

From the entire channel of distribution - companies make the product in their factory and deliver them to retail outlets. as the product is made in bulk and they have to take extra cost store them in factories they sell via retail store continuing supply chain the product goes in bulk to retail store and stored there so there is a cost-saving of storing also to run a business successfully product has to be visible in the market, more product is available in the market more is its visibility and people will know about it. So keeping the product in a retail store has its advantage from a marketing point of view.

The distribution network will take back the product right prom retail store to the company warehouse, so the company will lower manufacturing according to demand. From a consumer point of view if we see that if the demand of the product will increase they can buy direct from company online store and hence company profit will increase also if more demand is there retail store will communicate back so that retail store inventory of the product will secure according to the demand.

So in overall manufacture distributer and retailers are interconnected and consumer want is the chief to make the industry grow.

keosha answered 2 weeks ago
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