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CE Returns Cost Industry $17B In 2011: Report


of consumer electronics
products cost retailers and
manufacturers close to $17
billion last year, a recent
study by global consultancy
Accenture shows.

The figure, which includes
the cost of receiving, assessing,
repairing, re-boxing,
restocking and reselling returned
products, represents
a 21 percent increase since
2007, the firm said.

The report is based on
Consumer Electronics Association
(CEA) sales data
and an online poll of 100
retailers and manufacturers
of wireless handsets, personal computers, set-top boxes,
digital video recorders, high-definition TVs, game players,
MP3 players, computer software, printers and peripherals,
Accenture said. The poll shows that product return
rates over the past three to five years have increased for
more than half of the retailers (57 percent) and nearly half
(43 percent) of the manufacturers surveyed. Only 13 percent
of the retail executives and 12 percent of the vendor
executives surveyed indicated that return rates are trending

Of those returned products, computers and computer
peripherals continue to be among the CE devices most
commonly brought back within 15 days of purchase, according
to Siras, a product registration, return validation
and lifecycle tracking services provider. An exclusive report
for TWICE based on millions of products tracked in the
Siras program showed that nearly 79.9 percent of return
attempts occurred within the 15-day post purchase period,
comparable only to the portable media player category.

The escalating CE return rate cited in the Accenture
study contradicts a recent report from the CEA and
ShowUhow indicating that the rate of CE product returns
has remained consistent over the past few years. According
to the study, “CE Products Returns: Understand Why
They Occur and How to Reduce Them,” the number of
people who indicated they returned a CE device in the
past two years was 27 percent in 2010 through 2011,
with one in five (18 percent) reported having returned a
product in the past 12 months. Those findings are consistent
with CEA’s 2009 “CE Products Return” study, which
found 26 percent of consumers had returned a CE product
in the prior two years and 16 percent had returned a
product in the prior 12 months.

The CEA study also found that most returns are exchanged
for the same model and brand.
But both CEA and Accenture agreed that returns are
costing the industry dearly, and could be reduced through
increased customer education.

“While return rates remain consistent with previous
studies, they still have a significant revenue impact on
manufacturers, retailers and the entire industry,” said
Chris Ely, CEA’s industry relations manager. “Education,
either at the time of purchase or online before consumers
get to the store, will help customers learn more about the
product in advance and reduce the need for return, especially
around the holidays.”

Indeed, the Accenture research found that only 5 percent
of returns are related to actual product defects, and
that while 27 percent reflect “buyer’s remorse,” 68 percent
of returned products ultimately are characterized as
“no trouble found.” This means that, despite the customer
perceiving a fault, no problem was detected when the
item was tested against specifications set by retailers or
manufacturers, the study showed.

The report also concludes that solving this no-troublefound
problem — or even reducing it slightly — could have
a significant impact on the cost of returns. Accenture has
calculated that a 1 percent reduction in the number of notrouble-
found cases could translate to annual savings of 4
percent in return and repair costs, or $21 million for a typical
large CE manufacturer and $16 million for the average
consumer electronics retailer.

“These high consumer electronics return rates are unsustainable
in a sector with brutal competition and thin
margins,” said Mitch Cline, managing director of Accenture’s
electronics and high-tech group. “Manufacturers
and retailers should do more to differentiate
their customer service by helping consumers
understand, set up, use and optimize the
products they purchase. Most companies invest
considerable sums to manage returns, but
need to refocus their strategies on proactively
preventing returns through customer education
and aftermarket support.”

Janet Hoffman, managing director of Accenture’s
Retail practice, said retailers should
also establish “the right technologies and processes
to deal with these big-ticket item returns
to improve the customer experience and
achieve measurable and sustainable bottomline

The Accenture report, “A Returning Problem:
Reducing the Quantity and Cost of Product
Returns in Consumer Electronics,” identifies
several steps companies can take to attack this
problem. Most notably, companies should measure
the impact of returns, develop consumer
product-education classes, offer delivery and
setup services to consumers for highly technical
products, invest in proactive customer service
on high-cost/high-return products, provide
multiple service options, and create simpler
product designs.

For more information on the Accenture report