Returns may occur mostly under the following circumstances:
o When the end consumer is not happy with the quality of the product and has found it to be defective or it is not fulfilling the function it is supposed to
o When the forecasted sales have been more than the actual sales as a result of which stock turnover is low. This distributor then returns the excess to the manufacturer or to the channel partner immediately preceding him
Sales can also be used as a promotion technique by certain firms, which promise that the product can be returned back in the used state if the customer does not find it satisfactory. Thus, it is primarily a means to induce trust in the customer about the efficacy of the product.
Stock clearance or discount sales often have a no return policy.