Open Box: returns sold where they sit

The problem

A returned laptop sat in the store where it came back, invisible online. It shipped to one central warehouse to be graded and resold, and it lost value every week it waited.

What I saw

The buyer for a returned unit is usually online, and often near the store that already has it.

Once the system could see that unit, in that store, in that condition, it could be sold from where it sat instead of traveling to a warehouse first.

What I built

• Graded in the store, to one standard: with Geek Squad and retail operations, we defined what Excellent, Good and Fair meant, so a Good laptop in one store was a Good laptop in every store and online. Once a store graded a return, it was ready to sell from that store instead of shipping to a central warehouse first. This was part of Best Buy's returns, replacements and damages work.
• Condition as part of availability: new and Open Box became separate answers to "Can I get it?", by product, store and shopper, on the same inventory foundation as Availability at digital scale.
• Open Box in search and listings: returned units showed up where shoppers already looked, with an "Open-Box from" price on the product they were browsing.
• Sold from the store that had it: Open Box units enabled for ship-from-store and store pickup, so a return could leave from the store it came back to. When your store didn't have the unit, "Pickup today nearby" pointed you to the closest store that did.

The result

• In August 2014, Best Buy began offering Geek Squad certified Open Box inventory online, and its CEO said the majority of Open Box inventory is searched for and purchased online.
• In March 2015, Best Buy credited "higher margin recovery on returned, replaced and damaged products" in its domestic gross profit rate, and launched Renew Blue Phase Two with about $250 million remaining from its "returns, replacements and damages opportunity." That quarter's new cost reductions were driven first by lower costs from returns, replacements and damages.
• By May 2015, new search capabilities made returned Open Box inventory visible online, and in November 2015 Best Buy's CEO said the business benefited from "the visibility and searchability of open box and clearance inventory."

What I learned

A return isn't a loss until it waits. Selling it from where it already sits turns a cost line into margin.