5D3 Brand New - Over 6000 Shutter Count

Started 10 months ago | Discussion thread
vincent__l
Regular MemberPosts: 152
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Re: 5D3 Brand New - Over 6000 Shutter Count
In reply to jffielde, 10 months ago

According to the National Retail Federation merchandise returns as a percentage of total sales was 8.92% in 2011. Retailers usually do not discount more than 15% for selling a returned item (15% restocking fees are a profit center). A recently returned 5DIII would probably be discounted less than 5%. Let's just assume a discount of 15% to sell a returned item. 15% of 8.92% is 1.3% of total sales. In other words the retailer would take a hit of 1.3% to their total sales assuming a worst case discount of 15% for selling returned items.

As long as the return policy increases sales by more than 1.3% it is a strategy which increases NPV without having to resell any used items as new. Given that B&H's liberal return policy is one of the keys to their highly successful online sales strategy I would argue that the 1.3% hurdle is easily surpassed.

source:

http://www.theretailequation.com/Retailers/images/public/pdfs/industry_reports/ir_2011_nrf_retail_returns_survey.pdf

jffielde wrote:

I agree with you on the risk analysis. I also agree that it's easy to think of scenarios that clearly fall one way or the other. That being the case, a retailer can proceed in one of two ways (because they can't really know whether it was used hard those two actuations -- or dropped hard in the unopened box, for that matter with zero actualtions):

1. They can ask if the item is returned in undamaged condition within a short return period and resell the items as new if the customer says the item isn't defective; or

2. They can adopt a less flexible return policy.

I think that an option 3 is unrealistic: They can take back all returns but eat the reduction in value of selling them as refurbs. Because option 3 is economically suicidal, they all pick between the first two options (B&Ms choose option 2 more often than online retailers do, but in my opinion (based on almost nothing), 90% of both kinds of retailers choose option 1). I can tell you how many refurbs I see at our biggest local high-end camera retailer: none.

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