They are the six little words that can spoil an electronic vendor’s holiday.
After months of design meetings, weeks of in-store discounting and last-ditch advertising blitzes, million of crystal-clear flat-panel TVs, GPS locators and feature-stuffed smart phones have found their ways under American Christmas trees
Returns can be 5% to 6% of a vendor's sales
Now comes the verdict merchants fear most: “I want to take them back.”
Each year, $13.8 billion of electronics goods is returned to manufacturers, retailers and communications companies in the U.S. With the global downturn wearing on consumer spending, the total may be down slightly this year.
But on a percentage-of-sales basis, it could rise, with devastating consequences for companies already living on razor-thin margins.
“I believe the industry realizes this is a significant problem,” says Brian Sprague, senior executive at Accenture, who calculates the annual returns number.
Sprague says returns can account for 2 to 3 percent of a retailer’s sales and 5 to 6 percent of a manufacturer’s sales.
Among the products most likely brought back are mobile phones (especially smart phones), GPS gear and wireless networking equipment. High-definition televisions and computers also make the roundtrip to stores are a fairly brisk rate.
About one-quarter of consumers return because a product doesn’t work or because they perceived it doesn’t work. Only 5 percent of products actually have defects, says Sprague.
Nearly half of returns come because items don’t meet buyer expectation while the remaining consumers developed some sort of remorse for purchasing what they did – a feeling more buyers could have this year with money increasingly tight.
Sprague offers a list of best practices for companies experiencing returns. Many firms are doing some of them and top companies are doing many of them, he says. But “some companies are saying our margins are so thin we can’t put (new procedures) in there,” he says.
On his list are: 1) use graphical information and illustrations on a Web site to educate buyers about the use of a product; 2) put more product experts on consumer call-in lines; 3) put educated staff in stores to help with installations, data transfers and the like; 4) add to the packaging a request to call with problems or questions; and 5) provide displays at the point of purchase on how a product is used.
Flat IT budgets were found in North America and Europe with slight increases in Latin America and slight decreases in the Asia Pacific region, the firm said.
Posted by Mark Boslet 
