Returns Issues in the Consumer Electronics Industry


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It is estimated that returns cost the Consumer Electronics industry more than $10 billion annually, and although returns are unavoidable, it is essential that a means to capture the “true” reason for product returns be developed and implemented. Information obtained from the Consumer Electronics Association (CEA) indicates that over 60% of all returns reflect a reason code of “defective. ”

This seems quite high in light of the great expense and technology used by manufacturers of electronics in today’s market place. But let us for a moment examine the current method of gathering return information from the end consumer. In most cases when a product is returned a clerk simply asks the reason for the return, the consumer wanting to facilitate a smooth return experience simply states the product “doesn’t work” the product is returned, credit is received, and both parties are happy (especially since the true cost of the return is bore by the manufacturer/distributor).

In other cases, warehouse wholesale stores that rely upon consumer memberships ask few if any questions, concerned that a bad returns experience will cause the consumer to cancel his membership. Even certain retailers advertise “no hassle” return policies, suggesting that products can be returned for any reason at any time. In these cases the return’s clerk either marks the reason for return as “defective” or leaves the return reason completely blank; thus forcing the manufacturer to test the product to determine (or in some cases guess) the real reason for the return.

It is interesting to note that the CEA has recognized a new trend in the timing of returns. An analysis comparing return patterns from the year 2000 to 2002 suggests that individuals are holding products longer before returning to the retailer, thus increasing the usage time of the good. Although the bulk of returns (44%) are taken to the retailer within one week of purchase, items held for more than one month before being returned increased from 13% to 21% from 2000 to 2002.

The “true” reason for the return may vary from buyer’s remorse to displeasure with the color to even confusion on how to operate the product. In an ideal world the manufacturer’s help line would be called if the product does not work as expected. But we, as powerful and busy consumers, want a product to work as expected, right out of the box, without the fuss and muss of calling a technical support line.

The science of gathering accurate returns information is still being developed, and from the aforementioned data it is quite clear that we do not have a clear picture as to why people return goods, and retailer’s aren’t all that helpful in the gathering of data. It is not necessarily the retailer’s fault; because essential questions related to the product return could be perceived by the consumer as a “bad” return experience and could cause the retailer to lose that consumer (and others that may be swayed by the disgruntled consumer). If positive data could be gathered from the return of the product it could be used to enhance the consumer’s product experience or to reduce returns.

It is a difficult issue with no clear answers, consumer’s want power and choice, manufacturers do not want returns, and retailers are caught in the middle. Some manufacturers have attempted to develop returns programs to reduce or eliminate product returns but these have had marginal success mostly dependent of the rate of return. The ability to gather information related to product returns can lead to a strong competitive advantage and a better consumer experience but in order for this to occur we need to take the first steps in gathering the essential data.

Michael Spectre, MS


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