Losses of $17 Billion Projected from Returns of Tech Gadgets, Electronics

Customers are returning electronics at an increasing rate, possibly costing retailers and manufacturers $17 billion this year, according to a report by the management-consulting firm Accenture.

A survey of 100 consumer electronics retailers and manufacturers, and communications carriers in the United States, found that the cost of absorbing these returns has jumped 21 percent since 2007, Accenture said.

The projected $17 billion covers the expense of receiving, assessing, repairing, reboxing, restocking and reselling returned products.

These products include wireless handsets, personal computers, set-top boxes, digital video recorders, high-definition TVs, game players, MP3 players, computer software, printers and peripherals.

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 retailers and 12 percent of the manufacturers indicated that return rates are decreasing.

However, the Accenture research also found that only 5 percent of returns are related to actual product defects, while 27 percent reflect “buyer’s remorse” and 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,” Accenture reported.

The report said that solving this “No Trouble Found” problem – or even reducing it slightly – could have a significant impact on the cost of returns.

Accenture calculated that a 1 percent reduction in “No Trouble Found” cases could amount to annual savings of 4 percent in return and repair costs, or $21 million for “a typical large consumer electronics 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 & 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.”

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