In 2022, a record number of nearly 1.5 billion units sold were recalled. With consumer safety awareness on the rise, 2023 might see a similar trend, making it crucial for businesses across industries to stay alert regarding product safety and recall readiness.
Although it’s a dreaded occurrence for merchants, a product recall is also an opportunity to protect and potentially improve brand image. Handling them can be challenging though, so it’s important to establish an efficient product recall procedure. To help you out, we’ll provide practical guidance on managing recalls systematically while shielding your brand.
Product recalls are usually triggered when a product is found to be hazardous or fails to meet safety standards. Common reasons include:
Legally, a product should be recalled when it presents a significant risk to consumers or violates government safety standards. It’s essential for companies to stay up to date on the requirements for product safety to avoid the legal repercussions of a recall.
If a product is defective or unsafe and causes harm to consumers, your company may be held liable for damages. That may entail compensation for medical expenses, pain and suffering, and other losses the buyer experienced.
Additionally, there’s reputational damage to consider: The negative publicity surrounding a recall often has long-term, harmful effects on your brand’s image and diminishes consumer trust.
It’s helpful to look at some infamous recalls in recent recollection to understand just how long-lasting the fallout can be. Learn from these companies’ mistakes to prevent your business from suffering similar consequences.
A world-leading automaker, Toyota was embroiled in one of the most expensive recalls in history, affecting both car owners and shareholders. The automotive behemoth had to recall 8.1 million vehicles due to concerns that the gas pedals could become entrapped in floor mats (among other issues).
As the recall unfolded, government reports indicated that unintended acceleration in Toyota vehicles may have been implicated in the deaths of 89 individuals over the preceding decade.
Toyota estimated the costs associated with the recall to be around $2 billion in 2010. Adding to this financial burden, in 2014, Toyota agreed to pay a $1.2 billion fine to avert prosecution by the Justice Department for concealing information about the ill-fitting floor mats and other safety issues.
The Peanut Corporation of America (PCA) faced a devastating blow in 2009 when they became the epicenter of the largest food recall recorded in U.S. history.
The company shipped thousands of products, which they knew contained the lethal salmonella bacteria, across the U.S. and Canada. The ripple effect was immense, as some of those products were ingredients other manufacturers used in their food items, thus implicating hundreds of companies in the recall.
Manufacturers had no streamlined guides on handling product recalls at that time, so most had to wait anxiously for the Centers for Disease Control and the Food and Drug Administration to ascertain the cause.
The colossal mistake wreaked havoc on the peanut industry especially, extending far beyond the PCA and costing approximately $1 billion. Meanwhile, the financial strain was insurmountable for the PCA, and they were forced to file for bankruptcy the next year.
Merck, a pharmaceutical giant, had to recall their arthritis pain reliever Vioxx after five years on the market. The recall came with a staggering price tag of nearly $6 billion.
There were allegations that both Merck and the FDA had turned a blind eye to the risks associated with Vioxx. By the time the recall was issued, over 20 million people had been prescribed Vioxx, and it was estimated that up to 140,000 individuals experienced heart attacks or strokes due to taking the medication.
These examples underscore the importance of handling recalls properly to minimize damage to the brand and protect consumers through a robust procedure.
If the worst-case scenario comes true, what is your product recall procedure?
Whether you’re confident in your process or want help to be sure you cover all bases, here are the critical actions you should take to protect your business and brand.
The first and most important step is to remove the product promptly from retail shelves and online inventory. The urgency is due to the potential hazards the recalled product may pose to consumers.
As the recall news circulates, a natural reluctance to purchase the product will follow. So, the longer the product remains visible on store shelves, the more consumers’ trust in your company will deteriorate.
Ensure everyone in your company, especially the customer support team, knows about the recall. Provide them all necessary information and training to handle customer inquiries effectively.
Next, issue an immediate recall or alert via email, social media, and press releases. Clearly outline the affected product, how to identify it, and any corrective action required. Speed is of the essence, as delays can exacerbate the situation.
Establish a dedicated hotline or online information center for customers to call or visit for information and updates on the recall. This streamlines customer inquiries and ensures they receive accurate information.
Along with providing clear instructions about the actions people need to take, provide customer support to answer questions and ease the process.
Offer customers the option to exchange the product or receive a full refund. This allows them to choose the course of action that works best for them. Providing these options also shows you care about their satisfaction and are willing to make amends for your mistake.
Once the recall is over, keep your consumers informed about your findings, their options for next steps, precautions your company will take in the future, and any other information relevant to the event. This communication should be clear, concise, and honest.
When faced with a product recall, how you respond can mean the difference between salvaging your company’s reputation or facing a downward spiral. It’s a critical juncture where every action counts.
Here are some key reminders and best practices that’ll serve as a compass to guide your company through the product recall storm and ensure it emerges with its integrity intact:
A third-party logistics provider (3PL) like MyFBAPrep can assist with the reverse logistics of a recall to ensure returned products are dealt with according to your specifications. MyFBAPrep’s warehouses have excellent inventory tracking and processes, which enable our teams to separate specific batches of recalled items and thus avoid a larger-scale recall that could damage your brand. With MyFBAPrep’s help, you’ll feel confident that any recall you have to make is targeted and efficient to minimize financial and reputational damage.
A product recall is a defining moment for a company. If handled poorly, it can lead to major financial losses and long-term damage to the brand’s reputation. Managed well though, it presents an opportunity to demonstrate your business’s commitment to quality, safety, and consumer satisfaction.
Navigate this challenging situation successfully by developing an effective product recall procedure and being proactive, transparent, and customer-focused throughout the process. MyFBAPrep stands ready to assist with the logistics of recalls, helping your brand emerge from the chaos stronger and more resilient.