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Speaking of refunds, has anyone been able to wrap their head around how it's possible that the generous/overused return dynamic has continued to be sustainable?
by mindslight 3y ago
Speaking of refunds, has anyone been able to wrap their head around how it's possible that the generous/overused return dynamic has continued to be sustainable? It seems that retailers frankly just don't care about the level of returns, whether it's routinely packing things terribly to make a ball mill that damages items, or playing price games that directly create more returns - eg Amazon's continually volatile prices that encourage clicking buy and then deciding 30 days later, or Home Depot's combo deals that result in half the combo being predictably returned.
At this point I would have thought retailers would have fixed their own shipping processes to pack things so they're less likely to get destroyed. But nope, the best I've found is to break up orders on my end, assuming I don't forget and the shipping minimums allow. I'm just waiting for the other shoe to drop and retailers to start "cracking down" somehow. It seems like the classic Silicon Valley approach where they set up a poor process, planned to make it up on volume, and now have no visibility into the actual problems causing inefficiency. But yet somehow it's still working out financially.
The best I've been able to figure is that price fixing ("minimum advertised price") keeps margins high enough that retailers can eat multiple shipping costs, and retailers have gotten manufacturers to eat the cost of "defective items", creating at least a stable situation (although an inefficient one). But it still boggles my mind, especially seeing the trade in bulk pallets of returned goods, which makes it seem like many new condition resellable items still end up being considered salvage.
- gosub100 3y agomy bet is on tax shenanigans. The $100 item costs us $108 due to sales tax, it cost the seller $40-$60 to produce, but it only costs them $20-$40 (possibly more) for a refund because they can write off the loss.
- mindslight 3y agoThat doesn't make sense. In general, "write offs" just means subtracting a cost from profit, along with the cost they pay for the items that are successfully sold. (Unless you know some special tax result that allows them to deduct more than the price of the damaged item) I'd guess it's something to do with the margin being much much higher than we imagine. Like it's sold for $100, but it only costs $10-$20 incremental cost to produce. Hence why I'd think the manufacturer would be eating returns, because that allows them to keep their margin higher.