NEW YORK —
Returns 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 downward.
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 benefits.
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 visit