Clarify – 

By return rate you mean, the items bought from walmart and returned later ? – Yes

I would like to do an internal analysis and an external analysis in order to get tp the root of this problem ?

1. Internal Factors
   1. Data Quality – Validate if data is correct, check multiple sources and reports
   2. Time – When did we start seeing this issue ?
   3. Seasonality – Do return usually increase this time of the year.
   4. Percentage of Sales – Are returns proportional to sales i.e has the sales increased recently, maybe because there was an offer ?
   5. Product or Product line defects – Any known product defects recently which is leading to returns ?
   6. Channels – Are the returns coming from any particular  channel ? like ecommerce ? Walmart App? Store ? or third parties like Instacart ?
   7. Customer Care/Sales  – Check with customer care or sales for their input on any particular product or customer insights ?

2. External Factors
   1. Geography – Are the returns coming from any particular regions ? like countries etc ?
   2. External Incidents or News – Ex – COVID rumours increased grocery sales but later customer might be returning those products
   3. Competitors – Any significant product launch or release by competitors recently thats leading to the return of our products.
   4. Compliance Laws and Govt Announcements – Monitoring the local govt announcements , news etc that’s leading to the product returns.

I think by now, I know that the increase in return rate could be because of any of the factors or multiple factors.

In order to isolate the exact problem, below are the questions that have to be clarified:

1. Is the order return rate increasing over time or it’s sudden?

– Assumption is that the order return rate has been increasing over time.

2. Is the return rate increasing across all categories of products or only across certain categories?

– Considering the reputation of Walmart, it is highly unlikely that orders from all categories would be affected. So assumption is that only one vertical of product category has been affected.

3. Is the return rate increasing across all demography (Age, gender, country and income)?

– Assumption is that it has been increasing across all demography.

4. Has any new competitor entered the market?

– Assumption is that no new competitor has entered the market, although existing competitors are still there.

5. Has the price of the similar products selling by the existing competitors been changed?

– Assumption is that there has been no change in the price of the similar products by other competitors.

6. Has there been any change in the details (Product specs and price) of the product, the return rate of which is increasing?

– Assumption is that nothing has been changed in the product details part.

It is highly likely that the quality of the product has been hampered. And to make sure of it, a batch of the product should undergo a quality check. Also, it is important to go through the customer feedback at the same time.

Give me your feedback on my framework for answering this problem solving interview question.

Clarify:

1. Is this related to a particular geography? IVR: USA
2. Is this increase in return rate gradual or sudden? IVR: Gradual
3. Does the increase correspond to any specific channel: offline sales, online sales (app, web), partners (instacart)? IVR: We do not have that information
4. Is it related to a particular product category? IVR: We do not have that information
5. Has the way we measure return rate changed recently? IVR: No
6. Any changes to the return policy say from 30 days to 90 days etc. ? IVR: No
7. Does return includes exchanges as well? IVR: No

1. I would check the absolute numbers of return as well so understand if the sales have decreased and the return numbers stay the same. This will keep increasing the return rate if the most loyal customers are not purchasing from Walmart anymore.
2. I would check the product categories to get more granulaity. There may be some newly launched or bad batch categories that may be feeding the return rate.

1. Bad product batch or category that was launched. I would check if its the in-house great value brand or other brands that may be causing it
2. Bad PR: Increasing sentiment against Walmart in the community that affects SMB retailers. In this case, we may also see directional downward shift in overall sales as well
3. Any technical issues related to pricing and now customers are able to find lower prices for same product
4. Policy changes: such as removal of price match post purchase, sudden removal of installment billing

1. New competitor launched with promotions and lower prices of similar product categories that Walmart sells. This will impact sales as well.
2. Political activists triggering a movement against walmart and suggesting to ignore it
3. Seasonality: This increase is gradual this may not be possible
4. Major catastrophic event affects economy and livelihood. This will also impact sales