As mentioned in the WSJ article, The War on Returns, the U.S. electronics industry spent $13.8 billion to re-box, restock, and resell returned products in 2007. Only 5% of returns were due to defective products. The remaining 95% of products returned were due to reasons such as buyer’s remorse or not understanding how the product worked. With the economy slowing down, retailers and manufacturers are paying closer attention to decrease customer returns.

How are retailers decreasing returns?

Simple Instruction Booklets: Rather than providing lengthy information packets, manufacturers are offering simpler guides which help consumers get up and running faster with less hassle and confusion.

Personalize Products: Manufacturers such as Sony offer engraving services which makes it harder for consumers to bring back the product.

Extra Service: Retailers such as Best Buy’s Geek Squad offer in-home technical service. Rather than customers returning a product due to installation frustration, they can utilize a service such as Geek Squad.

Returns & Customer Lifetime Value

Studies show that a quarter of people who return an item do not buy that same brand again. Moreover, 14% of such people will unlikely buy from the retailer again. With the current economic state, manufacturers & retailers need to pay closer attention to returns as reducing product returns will help improve the bottom line; however, studies show that returns do impact future sales as well. Reducing return rates now can have long term positive effects as well.