Store Query

We looked for stores which had the highest return rate and also looked at the stores
which have the highest return contribution ratio. At first we looked at the Baton
Rouge Store. It had the highest return rate, but it was a relatively new store looking
at the number of purchases made there and the number of quarters for which the
numbers are listed, so we moved on to other stores. We looked at the stores which
were outliers in terms of the return contribution ratio. A very high ratio or a negative
ratio could both indicate fraud. The one we found interesting with the store 66
Extreme Retailers in Kansas City. It had a negative return contribution margin ratio,
which means that there were returns that were returned for a value much higher
than originally purchased. So we drilled down on this store by quarter, week and
weekday and found an instance where there was a negative return contribution
margin ratio of -0.7413.
Extreme Retailers KANSAS CITY (66) Store
Retur
n
Item
Qty

Return
Item Total
Retail

EA

Return
Item Qty /
Purchase
Item Qty

Return Item
Total Retail /
Purchase
Item Total
Retail

Return
Contributi
on Margin
Ratio

Cal.
year /
quar

Calendar
year /
week

Weekd
ay

20061

07/2006

111.48

0.0034

0.0056

0.3424

11

421.84

0.0166

0.0267

-0.7413

41.12

0.0027

0.0025

0.0384

428.29

0.0079

0.0242

0.0925

This instance also had a high return ratio, so it could be an instance of fraud. It
could be a case where there are lot of many purchases at discount rates followed by
returns at higher rates. This needs further investigation to check for fraud.

Product
We looked for products which have the highest return rates first since this is one of
the first potential indicators of fraud. We then drilled down by stores to see if any
stores have higher rates than the normal. Flowers was interesting since for the
Augusta store, the rates were much higher than for all the other stores. So we
drilled down further to see all the flower purchases in Augusta by days to see
variations. We found one instance where flowers were returned at a rate way higher
than the rest. This could be an indicator of fraud. We also did a return CMR/purchase
CMR ratio which was negative for only this particular case. This again indicates that
something fishy could be going on here. We have to contact Sams Club Augusta
store for further inquiry into these returns.

Retur
n Item
Qty /
Purch
ase
Item
Qty

Return
Item Total
Retail /
Purchase
Item Total
Retail

Retu
rn
Item
Qty

Retur
n Item
Total
Cost

Retur
n Item
Total
Retail

EA

211

4,403.25

4,773.45

0.0070

0.0074

11

244.95

264.17

0.0023

0.0027

566

11,544.4
7

10,739.7
9

0.0143

0.0129

20

436.19

454.84

0.0062

0.0063

141.97

133.29

0.0043

0.0037

53

1,218.92

1,287.60

0.0022

0.0025

Retu
rn
Item
Qty

Retur
n Item
Qty /
Purch
ase
Item
Qty

Retur
n Item
Total
Retail
/
Purch
ase
Item
Total
Retail

Retur
n CMR

18

0.0090

0.0145

0.0678

2.1341

17

0.0040

0.0046

0.0519

1.7272

20

0.0049

0.0068

0.0550

1.6926

440

0.0753

0.0591

-0.1409

-6.4546

19

0.0019

0.0020

0.0411

1.3582

33

0.0035

0.0049

0.0585

1.7976

19

0.0051

0.0071

0.0586

1.8045

Flowers
Extreme
WA
Extreme
WA
Extreme
VA
Extreme
NY
Extreme
CITY,
Extreme
CITY,

Retailers ATLANTA,
Retailers ATLANTA,
Retailers AUGUSTA,
Retailers JACKSON,
Retailers KANSAS
Retailers KANSAS

Weekday

Return
CMR/Purc
hase CMR

Switch fraud
Purchasing a working item,
and returning a damaged or
defective identical item that
was already owned

Analyze if there are products with a

high return rate. Analyze to see if there
are members who are returning more
of these products than other products.
Also check if members are returning
unique products or not. Members
returning more of the same type of
product could indicate a chance for a
product that could be defective but
easy to return as a new unused
product.

Cross-retailer return

Returning or exchanging an
item purchased at another
retailer (usually at a lower
price) for cash, store credit or
a similar, higher-priced item
at another retailer.

Analyze stores to see if some stores

have a return trend where the returns
are higher than purchases to see if the
items were bought at a different store
and are being returned to a different
store. Check these stores for their
return contribution margin ratio by
purchase contribution margin ratio for
purchases by product or by time of
purchase. An outlier could indicate that
products with a lower cost item are
being returned at a much higher price.