ELECTRONICS Returns are a thorn in the side of retailers

KNIGHT RIDDER NEWSPAPERS
Here's a modern-day morality pop quiz:
One: You want to host a big party for the Super Bowl. Is it wrong to buy a 60-inch projection television set a week before the game, then return it a few days after Super Sunday?
Two: Your new DVD player only makes grinding noises. Is it wrong to expect a full and immediate refund?
Three: You see a digital camera on sale and decide to buy it on the spur of the moment. Is it wrong to return the camera after discovering your home computer doesn't meet the system requirements?
The answers are: Yes, No and Who Knows?
We, the consumers of America, are incredibly pampered. Retailers compete for our business with elaborate promises of no-hassle returns, struggling to keep smiling as many of us abuse the system.
The problem of product returns is particularly acute in consumer electronics. It's no big deal to re-fold a knit sweater and put it back on the shelf. Figuring out what to do with a returned digital camcorder -- which can't legitimately be sold as new -- is a much bigger challenge.
Billions in returns
As we enter another "buy before you try" holiday season, shoppers are expected to return 7 percent of consumer electronics purchased -- a stunning $10 billion a year, according to the Consumer Electronics Association of Arlington, Va.
Both manufacturers and retailers are groaning under the burden of so much backward-flowing inventory, giving rise to an industry-within-an-industry called "reverse logistics" that develops strategies for disposing of returned merchandise. The newest wrinkle: selling refurbished electronics on eBay.
Of course, consumers ultimately pay for liberal return policies through higher margins charged by manufacturers to retailers and by retailers to customers. This cost is hard to see, given the relentless downward spiral of consumer electronics prices, but it's there. The industry keeps wringing its collective hands at conferences and seminars.
At the CEA's annual fall conference last month in San Francisco a panel discussion was titled "Taming the $10 Billion Beast: Reducing the Costs of Taking Back Product" It included solemn talk about forcing consumers to accept more responsibility -- even as the panelists admitted competitive pressure among retailers is too intense to move away from virtually unlimited returns.