Repair May Be the Needed Fix to Increase “Return on Returns.”
Returns, especially consumer electronic devices, are a big business. According to a 2011 study by Accenture, between 11% and 20% of all consumer electronics (CE) devices purchased in the U.S. are returned. With volumes like that, it’s important for both retailers and manufacturers to manage returned items in ways that maximize their bottom line.
The unopened box items are easy to process, but what can be done with items that have been opened, used or even damaged in transit or during the returns process? Years ago, you would simply pay someone to recycle them and take the financial hit, but today there is such a growing aftermarket for these refurbished products that retailers and manufacturers would miss a real opportunity for resale, and therefore a larger yield, if they continued their outdated recycling process.
The key to optimizing the CE returns process and yielding the greatest return on returns is to truly understand the current market value of the item. Many CE products have a significant aftermarket value and it is worth the money to consider not only refurbishing damaged products, but also repairing them. It’s also key to have clear guidelines about where to draw the line between cost-effective repair versus potential value in the recovery of materials.
ModusLink leads the industry in reclaim services. Part of that process is strict evaluation and grading, then multiple levels of repair capability. Here is a breakdown of repair efforts:
LEVEL 1: No Fault Found
At this level, the unit is tested and inspected and if it passes the full functional test, the item can be repackaged and kitted for resale. This simple process is simply to ensure the unit is working properly. According to the 2011 Accenture study, 95% of all U.S. returned CE products will pass this level.
LEVEL 2: Software Upgrade
In addition to level 1 repair, some units may benefit from a software upgrade. This assures that when the product goes back out into the market it functions at the highest level for that product and support requirements for the product will be minimized.
LEVEL 3: Minor Repair
This level means that during the inspection process, the unit failed, but that failure is assumed to be a typical problem that can be remedied quickly. This may include repair or replacement of basic electronics or cosmetic parts. Once this repair is completed, extensive testing of the unit is performed again. If it passes, it goes on to resale. If it fails, it goes to Level 4 Repair.
LEVEL 4: Component Level Repair
In-depth diagnosis and repair is required to identify and fix damage all the way down to the circuit or component level. Years of experience and certifications are required as well as specialized equipment such as microscopes, temperature controlled soldering stations, heat guns, and BGA repair stations. Often times a small repair from an experienced technician on a valuable device, can increase yield to levels not thought possible before.
While many CE companies are taking this route to maximizing returns, a good number more can benefit from a proper feasibility study regarding repair options, parts availability and repair costs. This, coupled with a good market valuation study on the particular product, can help outline a specific plan for optimization of returns and added support for the bottom line.