Coupons and Returns...
Discount coupons have always been a very artful hook for retailers to get more customers interested in buying from them, rather than from their competitors. And in these times of a slow economy, retailers have unleashed the "coupon warfare" like never before. There subsists a gamut of coupons ranging from "Instant Discounts" to "Web Specials", and to even fancy-named ones like "Store Cash".
Recently came across an interesting experience which demonstrates the complicated levels to which retailers are taking coupons. This particular store gives a $ off coupon called "store cash" when a customer spends over a certain amount. This "store cash" coupon can be used for future purchases from the same store. I will present this experience as a hypothetical scenario to keep it simple. So here is what happened:
1. Customer X bought an item A for $50 and got a $10 off "store cash" coupon to be used for a future purchase
2. Using the $10 "store cash" coupon customer X bought an item B worth $50 and was charged $40 only. The total charged to the customer for both purchases (Item A and Item B) was $90 and there is a discount for $10 from the coupon used for the purchase of Item B.
3. Customer X returns both item A and item B.
How much should customer X get back? Usually, based on the retailer or type of coupon there could be two scenarios:
a) Refund whatever the customer actually paid ($90) back to the method of payment used for purchase, and refund the coupon as another coupon or as merchandise credit
b) Refund only what the customer actually paid ($90) to the method of payment used for purchase, and do not refund the coupon.
But this was not true in the case of customer X. What customer X got back was only $80 and a merchandise credit for $10. So in other words, customer X ended up spending a net amount of $10 to purchase an equivalent value of merchandise credit!!!
The retailer in question tracks the usage of the "store discount" coupon that was given out on purchase of item A. As soon as customer X used the coupon for item B it was marked as used.
- If customer X were to return only item B, the refund amount will be $40 refund to the payment method used and $10 in merchandise credit in lieu of the coupon used.
- But, interestingly it customer X returned item A alone, the refund will be only $40, because the coupon given out on the sale of transaction is still market as "used".
The retailer redeemed the coupon when it was used, but did not un-redeem it when the purchase associated with the coupon was returned leading to the scenario described above.
From a retailer's point of view, these kinds of coupons may be a good marketing pitch to the customer. But it needs to be backed up with investments to handle these coupons. In the scenario above, the retailer should have a method to track if any part of the sale (item B) using the coupon was returned, and then appropriately update the sale transaction for Item A.
