Many (un)Happy Returns


I hope that all of you survived the Christmas season and that Santa was good to you.

Were you one of the unlucky ones whose newest thing-a-ma-bob didn’t work as advertised?  Maybe it was hurtled a little too vigorously down the chimney, or maybe the assembly line elf was asleep at the switch.  Regardless, I’m sure it was frustrating as you agonized in the customer service line waiting to return that defective product.

If that did happen to you, my sympathies.  But, as it turns out, there might not have been anything wrong with it after all.

Before the break, I read an interesting article on the ‘Retail Info System News’ website: “Consumer Electronics Returns Costs $16.7B Called Unsustainable”.  You can find the original article here: http://goo.gl/Nd3Ub

This article discusses a study by Accenture which examined the high cost of returning consumer electronics.  This includes receiving, diagnosing, repairing, re-packaging, shipping, then eventually re-selling.  They found it amounts to $16.7 billion dollars a year.

That’s right.  $16.7 billion.

Is this just a cost of doing business?  Some would say so.  But here’s the kicker.  68% of ‘defective’ product returns, when investigated, are deemed to have ‘No Trouble Found’.  Only 5% of returned products are truly defective.

So what does this mean for the retail industry?  It seems that a majority of returns are related to poor customer education.  Here’s a great opportunity.  Imagine implementing an in-store program that helps customers understand, setup, use and optimize the products they purchase.  What a great way to improve the customer experience and turn customers into repeat, happy customers.

And, more importantly, save money.

According to Accenture “Reducing the number of NTF customer returns by just one percent would translate to roughly a 4% cut in return/repair costs. For a typical manufacturer, that represents approximately $21 million in annual savings; for a large retailer, about $16 million.”

Now that’s a kind of return we can all appreciate.

How do product returns affect your business?  Do you have any programs in place to curb the amount of unnecessary returns?

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Posted on January 3, 2012, in State of the Industry and tagged , , , , , , . Bookmark the permalink. 2 Comments.

  1. Meagan,

    Great article! It exposes the weaknesses on the selling floor of most businesses. Salespeople must learn and understand that purchases are made emotionally and justified later with logic. That’s just the way we are. If retailers want to reduce returns and cut the costs, the best place to start is at point of sale.

    Instead of concentrating on getting the money in the cash register and the customer out the door salespeople should be more concerned with educating the customer as you mention in your article.

    This includes the (heaven forbid) possibility that what the customer wants may not be right for them and you tell them this! I can hear the heart palpitations right now of all of your sales manager readers.

    Here are three questions that more salespeople have to develop the guts to ask their customers before they buy:

    Are you sure this is what you want?
    Are you sure this is what you were after?
    Are you sure you understand everything about this product?

    Teach them to do this and they WILL make a huge dent in their number of returns!

    • Thanks Joe, great comments as always. And further to your point, if the customer takes home the right product the first time, a repeat trip to the store will be for an additional purchase instead of a return.

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