Peak Margins, Happier Customers and Reduced E-waste

Investing in systems to understand consumers and what they want is a big trend in e-commerce – one that should also extend to returns. It leads to fewer returns, higher profits, and less e-waste. The e-waste issue becomes more and more problematic as return volume increases.  

No industry has seen this more than consumer electronics. Miniaturization and the blending of plastics with carbon or glass fibers to make them lighter are just two of the challenges facing consumer electronics manufacturers and retailers as they seek to deal with mounting rates of e-waste, according to a recent story in the Wall Street Journal. 

These trends add time and complexity to the task of separating components of unwanted electronic devices. The world’s volume of e-waste is on pace to increase by 33% between 2012 and 2017, according to a report published by the UN-backed organization StEP (Solving the E-Waste Problem (StEP).  

E-waste isn’t just outdated computers and broken old electronics. A significant source is new products that got returned because consumers didn’t understand how to use them. The Consumer Electronics Association found 62% of consumers who returned a product believed it was broken. 

Best Buy estimates that returns, replacements, and damaged goods represent about 10% of its revenue, which cost the company $400 million in 2014, according to the WSJ.  

Retailers must treat returned products as used, and by the time they’re examined and made re-saleable, they’re often already past their peak value.  

Burt White, vice president of industry supply chains at the consulting firm Chainalytic, told WSJ that companies today are looking for value not just in the sales of their products but in their returns – whether through recycling or redistribution. “The whole thing with any of these components is, where is the highest value?” he said.  

But even companies on the frontier of E-waste management overlook significant sources of value: customer data, product data, and how to use these to prevent a return in the first place. Customer lifetime value is a crucial metric in today’s consumer-empowered retail climate.  

By applying analytics to returns, electronics retailers and manufacturers can act quickly to prevent those returns from happening in the first place. That delivers the ultimate value: peak margins, happier customers, and reduced e-waste challenges.