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Accenture report: Consumer electronics industry faces projected $17 billion product returns bill

New York City -- Customers returning electronics products will cost U.S. consumer electronics retailers and manufacturers nearly $17 billion this year, an increase of 21% since 2007, according to a new Accenture research report. These costs include receiving, assessing, repairing, reboxing, restocking and reselling returned products.

Only 13% of the retailers and 12% of the manufacturers surveyed indicated that return rates are trending downward, according to Accenture’s “A Returning Problem: Reducing the Quantity and Cost of Product Returns in Consumer Electronics.”

The 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%) and nearly half (43%) of the manufacturers surveyed.

However, 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% of returns are related to actual product defects. While 27% reflect “buyer’s remorse,” 68% 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, according to the report.

The 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% reduction in the number of No Trouble Found cases could translate to annual savings of 4% 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. Most companies invest considerable sums to manage returns, but need to refocus their strategies on proactively preventing returns through customer education and aftermarket support.”

© 2014