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How To Decrease Product Returns

Retailers, manufacturers and consumers can work together

October 19, 2011 By Ben Arnold, senior research analyst for CEA
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With wholesale shipments expected to eclipse $190 billion in 2011 and ownership rates of several key consumer electronics continuing to climb, the CE industry continues to be a bright spot in an otherwise gloomy economy.Despite high unemployment and waning consumer confidence, shoppers are still buying smartphones, high-definition TVs and tablets at a high rate.

Despite the increased demand for electronics, product returns remain a factor that eats into manufacturer and retailer margins.CEA’s recent research study, "CE Product Returns (2011)," takes a look at the current state of CE product returns, comparing historic rates and offering solutions on how sellers of technology can proactively prevent returns.

CEA estimates that 18  percent of CE product purchases are returned annually (this includes video, audio, computing, and communication electronics), which about equals 2009’s estimate. CE accessory returns have also remained unchanged since then. But despite that flat rate, the amount of consumers has grown along with the selection of CE products on the market.

To develop strategies that help manufacturers and retailers better handle product returns, it is important to understand why consumers made the returns in the first place.When CEA asked consumers the top reasons prompting their most recent return, four in ten (43 percent) replied the product did not “work as expected” with slightly fewer (38 percent) saying the product broke while in use. These findings are indicative of device performance not matching the consumer’s original expectations.Education on the set-up process, compatibility with other devices, and expected performance are some of the most important steps sellers can take to minimize product returns.

Some people may question if product returns impact consumer perceptions of a retailer or manufacturer. Though some consumers may go through a short period of dissatisfaction as a result of a product return, their feelings generally do not dissuade them from making a repeat purchase.When asked how likely they would be to buy the same brand again, nearly two in three (64 percent) recent CE returners said they would buy again and a similar number (69 percent) indicate they would buy the same product.Returners are also likely to shop the retailer they bought from again with eight in ten (82 percent) indicating their willingness to shop at the same retailer.

So what can CE sellers do to decrease returns? Consumers have a few ideas.First, it is no surprise consumers feel that “better working products” (indicated by 61 percent of recent returners) would make them less likely to return.But many said more conscientious pre-purchase actions, including more product research on their part (29 percent), better retailer customer support (26 percent), and better instructions from the retailer (24 percent).Consumers perceive return prevention as a responsibility shared (at least in part) by retailers, manufacturers and themselves.

 

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