Return To Sender

In an article in the WSJ this morning (subscription required) the journal points out the eye-popping costs associated with returns in the consumer electronics industry. $13.8bn is the round number they suggest manufacturers and retailers incur as a result of consumers bringing back product they don't want. So what?

In an article in the WSJ this morning (subscription required) the journal points out the eye-popping costs associated with returns in the consumer electronics industry. $13.8bn is the round number they suggest manufacturers and retailers incur as a result of consumers bringing back product they don't want. So what?

Well, what's interesting is the response of the industry. In prior efforts, the classic response was to make it more difficult for people to return product, create barriers, charges etc.This time, the story is different. Only 5% of returns are due to product defects, the remainder being what is often referred to as "no fault found". The real culprit, according to the article, is that the product fails to meet expectations or is too complex to use.

And this time, firms are focusing on the root cause rather than penalizing the buyer. Better technology is clearly part of the answer, but better documentation and customer service/training is seen as a worthy investment. It doesn't seem a radical notion, fix the problem by creating a better experience, but it flies in the face of conventional thinking from the last 10 years where the answer was to view customers who bought products they didn't want, but could neither use them or return them, as just a profitable bonus. Bad profits if ever you saw them.

Oh, and guess what. Returns have a negative brand (NPS by implication) effect and manufacturers are understanding the implications to them. Fix the problem upstream, don't create detractors and don't penalize customers who can't use your products because they are too complex. Good to see firms moving in the right direction.

Well, what's interesting is the response of the industry. In prior efforts, the classic response was to make it more difficult for people to return product, create barriers, charges etc.This time, the story is different. Only 5% of returns are due to product defects, the remainder being what is often referred to as "no fault found". The real culprit, according to the article, is that the product fails to meet expectations or is too complex to use.

And this time, firms are focusing on the root cause rather than penalizing the buyer. Better technology is clearly part of the answer, but better documentation and customer service/training is seen as a worthy investment. It doesn't seem a radical notion, fix the problem by creating a better experience, but it flies in the face of conventional thinking from the last 10 years where the answer was to view customers who bought products they didn't want, but could neither use them or return them, as just a profitable bonus. Bad profits if ever you saw them.

Oh, and guess what. Returns have a negative brand (NPS by implication) effect and manufacturers are understanding the implications to them. Fix the problem upstream, don't create detractors and don't penalize customers who can't use your products because they are too complex. Good to see firms moving in the right direction.