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Right of Return

There was a time when you could safely assume that a product’s existence on store shelves meant that it had undergone some reasonable level of testing. I guess those days are gone. In today’s hailstorm of consumer electronics raining from the heavens, it seems that the emphasis is on getting to market, not getting it right.

Years ago, I learned the difference between the words “to” and “through.” I learned about the industry’s zeal to report “sell to,” which meant how many items you shipped to the retailers. Apparently, it was easy to jack this number up by just getting retailers excited about a flood of orders that would never materialize. You may remember stories in the post-Enron days about shipments sitting in an empty warehouse being counted as “sales”. A much more meaningful statistic I learned was “sell through” – how many products the retailers actually sold through to consumers. But now, more than ever, the thing that counts is “net unit sales” – how many products are sold less the number that are returned. Because, today, product complexity and poor design are causing record returns. And despite the sense you get from the press, that lack of consumer understanding is hampering the transformation to a digital lifestyle.

To my wife (my prototypical non-technical but intelligent consumer), Best Buy these days feels a lot like a science fair. There’s a lot of stuff there that looks like something she understands, but upon closer inspection, it’s mostly over her head. 480p, 720p, 1080i, 1080p, HD DVD, Blu Ray DVD, DVR's, Sling Boxes, Routers, Gateways, Hubs, Switches, Wireless G, Draft N, oh my! Generally, she runs out screaming. But if they can get somebody like her to buy something (other than CD’s and DVD’s), the odds are good that the product will come back to the store.

Historically, returns in consumer electronics stores have been in the mid-single digits – generally around 5-8%. With today's crop of digital media-oriented products, that ain't the case. We’ve heard that home networking return rates range from 30-50%. HDTV’s are still returned at a remarkable clip, but consumer confusion doesn't always end in a return. A large number of buyers of HDTV’s don’t get HDTV signals and don’t know it. I had a guy on the street tell me recently that his HDTV improves his standard-def TV signal quality. Huh? Confusion runs rampant and is impacting enthusiasm for the products.

For the seamless digital future we dream of to ever exist, products have to be a lot more user friendly and plug-and-play. Consumers have to understand more about what they’re getting into, and why they should want to get into it!

The good news is that there’s a lot of innovation. The bad news is that there’s a lot of innovation for innovation’s sake. Many products are clearly designed by engineers for engineers. And everything is rushed to market. That environment favors product designers with an uncanny sense (or at least a deep understanding) of what consumers want and need, and if you ask any Joe in the return line, he'll tell you that we need more companies with those insights. All indications point to a bright future for consumer electronics and digital media consumption, but it will only be sunny if the CE, tech and content companies can see things from the consumer’s point of view (rather than from that of the engineers and marketers). Think about the consumer. Think about the consumer experience. Think about educating the consumer. Put the emphasis on getting it right, not on getting to market.

And, oh, by the way, when you read about how many zillions of iPhones were sold on June 29th, remember to ask 30 days later what the net number was after returns. That’s the only statistic that will matter, and it will tell us a lot.


Posted by David Wertheimer on Wed, 2007-06-13 18:52


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