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returning electronics products will cost U.S. consumer electronics retailers
and manufacturers nearly $17 billion this year, including receiving, assessing,
repairing, reboxing, restocking and reselling returned products. This
represents an increase of 21 percent since 2007, according to a research report
from management consulting, technology services and outsourcing company
Accenture (NYSE: ACN).

research is based in part on a survey of executives from communications
carriers, consumer electronics retailing and consumer electronics manufacturing
companies, which revealed 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 retailers and 12 percent of the manufacturers surveyed indicated that
return rates are trending downward.

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 ultimately are characterized
as “No Trouble Found.” This suggests that, despite the customer perceiving a
fault, no problem was detected when the item was tested against specifications
set by retailers or manufacturers.

report also concludes that solving this No Trouble Found 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 No Trouble
Found cases could translate 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.

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.”

report also 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.