Fascinating New Yorker story by David Owen about product returns:
Steady growth in Internet shopping has been accompanied by steady growth in returns of all kinds. A forest’s worth of artificial Christmas trees goes back every January. Bags of green plastic Easter grass go back every spring. Returns of large-screen TVs surge immediately following the Super Bowl. People who buy portable generators during weather emergencies use them until the emergencies have ended, and then those go back, too. A friend of mine returned so many digital books to Audible that the company now makes her call or e-mail if she wants to return another. People who’ve been invited to fancy parties sometimes buy expensive outfits or accessories, then return them the next day, caviar stains and all—a practice known as “wardrobing.” Brick-and-mortar shoppers also return purchases. “Petco takes back dead fish,” Demer said. “Home Depot and Lowe’s let you return dead plants, for a year. You just have to be shameless enough to stand in line with the thing you killed.” It almost goes without saying that Americans are the world’s leading refund seekers; consumers in Japan seldom return anything.What happens to returned stuff? Well, hardly any of it ends up resold as new. Much of it simply gets shredded and recycled or landfilled. But quite a lot gets bought for 15 cents on the dollar or less by companies that specialize in extracting value from it. Some ends up at discount retailers or outlet stores. Owen spent some time with a company that repairs items returned because of minor damage, or because the customer didn't understand how to use it – this includes vacuum cleaners returned because the customer apparently didn't know they had to be emptied. Lots of robotic vacuum cleaners are returned because people can't get the wi-fi connection to work. Some pressure washers are returned because the purchasers turned them on without hooking up a hose, which quickly burns out the motor. Owen asks why the manufacturer doesn't install a shut-off, but is told it probably wouldn't be worth it financially.
Earlier this year, I attended a three-day conference, in Las Vegas, conducted by the Reverse Logistics Association, a trade group whose members deal in various ways with product returns, unsold inventories, and other capitalist jetsam. The field is large and growing. Dale Rogers, a business professor at Arizona State, gave a joint presentation with his son Zachary, a business professor at Colorado State, during which they said that winter-holiday returns in the United States are now worth more than three hundred billion dollars a year. Zachary said, “So one and a half per cent of U.S. G.D.P.—which would be bigger than the G.D.P. of many countries around the world—is just the stuff that people got for Christmas and said, ‘Nah, do they have blue?’ ” The annual retail value of returned goods in the U.S. is said to be approaching a trillion dollars.
And so it goes.
But at least companies like the one Owen visited to repair and resell some items. Some they even improve; for example, many printers are sold with only wi-fi connections that the purchasers can't make work, so this company installs an ethernet plug before they resell.
And this:
The rise of online shopping has been very good for people who build immense, low, flat-roofed metal structures.
Owen asks why the manufacturer doesn't install a shut-off, but is told it probably wouldn't be worth it financially.
ReplyDeleteWhy would the manufacturer care, when it's the retailers who primarily eat the cost of returns and unsold items?
I feel like manufacturers should want to sell good products because people who like them might buy that brand again. If you thought your pressure washer blew up on the first day because it was faulty, would you buy another from the same company?
ReplyDelete@John
ReplyDeleteManufacturers and "brands" are growing ever more separate, in a world where companies are treated more and more as disposable and replaceable.
Most cheap items are made in China. Even if they aren't, and are made by companies that American consumers might have actually heard of, they're almost certainly sold on the shelves under other names as "private label" products.
So even if a customer thinks an item is faulty and swears off the particular brand they bought, the next time they go buy that item, it might still literally be made by the exact same manufacturer, just under a different name, and in a slightly different configuration / model.
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That said, in the particular case of pressure washers, my sense is that the market is already dominated by a few very big brands like Ryobi, who are so monolithic and have so little competition that they can afford to simply not care.
Also, the nature of the market for pressure washers is such that the people buying them tend to know how to properly use them, and aren't going to burn out the products in dumb ways. I can't imagine the percentage of people bricking their pressure washers is very large.
Moreover, the people who DON'T know how to properly use items like pressure washers tend to seek advice from more knowledgeable sources, and will usually bother to have someone troubleshoot their burnt out item, and swiftly learn that THEY broke it, and it wasn't a manufacturer flaw.
At which point they go return the item, get their money back, and the reputation of Ryobi or whoever doesn't actually suffer.
Now, you might think that the retailers, who are the ones stuck footing the bill, might grumble about the returns. But they're not going to drop such a massive supplier as Ryobi, no matter how many returns they get.
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I worked for a company once that used reusable plastic bags for bundling customer products. These bags had astoundingly bad quality control. They were frequently misprinted, and (far worse) roughly one in every four bags was structurally unsound and would tear open and become useless with the slightest strain. We would routinely open fresh boxes of bags and pull out ream after ream of bags in which every single bag in the ream was faulty and had to be thrown away / recycled.
This was a huge company, with many stores across the country, and they went through very large numbers of these bags. And at least 25% of the bags we received were wholly unusable. And the workers complained and complained and complained about the problem, because in addition to the waste of useless bags, it was wasting lots of man hours as well, with employees having to hunt for good bags among swathes of bad ones, before being able to get on with their jobs.
But corporate didn't care. They would have us call the manufacturer to report our problems, but these reports were made for years, and nothing ever changed, and our company kept using the same supplier. Why? Because there's not a ton of competition in the field of plastic bags, shockingly, and they would rather lose 25 cents on the dollar (plus wasted man hours) buying bad bags than risk their relationship with the supplier. We employees hated the bags; our customers hated the bags; corporate knew they were junk; and yet, every year, they paid millions and millions for more junk, and just wrote it off and didn't care.
...but heaven help you if you're hourly instead of salaried and stay twenty minutes late to finish up something important! They'll write you up and threaten to fire you! Money doesn't grow on trees, you know! >eyeroll