The United States consumer electronics industry is battling a behemoth, escalating and unsustainable problem: product returns.
The problem is not new. It has existed as long as there has been a consumer electronics industry. But in recent years customers’ expectations have risen, products are increasingly more complex, and efforts to stop the wave of resulting returns have not kept pace. For companies to achieve high performance, this severe problem needs to be comprehensively addressed. Transformative systemic changes are needed now.
Accenture arrived at this conclusion based on new research revealing that customers returning electronics products will cost U.S. consumer electronics retailers and manufacturers nearly $17 billion this year, an increase of 21 percent since 2007. These costs include receiving, assessing, repairing, reboxing, restocking and reselling returned products. The report, “A Returning Problem: Reducing the Quantity and Cost of Product Returns in Consumer Electronics,” captures key findings and insights based on the survey.
The research is based in part on a survey of executives from communications carriers, consumer electronics retailers and consumer electronics manufacturers. Our survey revealed that product return rates over the past three to five years have increased for more than half of retailers (57 percent) and nearly half (43 percent) of manufacturers surveyed. Only 13 percent of the retailers and 12 percent of the manufacturers surveyed indicated that return rates are trending downward.
However, the Accenture research also revealed a significant opportunity for the industry to cut costs and reduce the level of product returns, given that only 5 percent of returns are related to actual product defects. While 27 percent reflect “buyer’s remorse,” 68 percent of returned products are characterized as “No Trouble Found.” This means that, despite the customer perceiving a fault, no failure was detected when retailers and manufacturers tested against their specifications. When a customer returns a device to the retailer because the device did not meet their functional or usability expectations, it’s a double tragedy: the customer turns unhappy with the experience and the retailer and manufacturer lose money.
But why hasn’t the problem been addressed? For three primary reasons: First, returns are often thought of as a cost of doing business. Second, companies focus on efficiently handling returns rather than preventing them. And third, companies often adopt a one-size-fits-all approach towards returns.