Apple Inc. Speeds Returns To Boost Sales

iPhone 8JESHOOTS / Pixabay

As Apple Inc. (NASDAQ:AAPL) jettisons into the second spot in worldwide online retail sales, nudging out Staples and landing right below Amazon.com, Inc. (NASDAQ:AMZN), the company is cutting in half the time it takes to get refunds from their online store.

Customer service as customer battleground

The move is a significant upfront cost to Apple Inc. (NASDAQ:AAPL), but has potential for the firm to lure away customers from Amazon.com and Best Buy, a Reuters report noted, quoting industry experts.

Customers who purchase a product from Apple’s online store now receive a refund in less than a week, down from the previous ten day average, according to StellaService, a retail intelligence firm.  An investment in merchandise returns to boost sales is a noteworthy tactic.  “This is the first time we’re seeing an investment like this on the returns side,” Kevon Hills, StellaSerive’s vice president of research, told Reuters.

Apple Inc. (NASDAQ:AAPL) is processing returns faster due in part to the use of expedited two-day delivery service from FedEx, according to the report.  Customers ship returned items with prepaid labels to its warehouse in three days and have it back in their hands in four days.

If better returns are being used as a marketing tactic, why so quiet?

StellaService, with Amazon.com’s Zappos as an example of one retail client, first discovered the quicker return processing times this past November, but deduced it up to a temporary measure for the busy holiday season. The company purchases product from Apple’s website several times a day for its research purposes and first noticed the shift when packages were stamped with FedEx 2Day prepaid label.

“Speed is becoming a significant competitive weapon” in the e-commerce wars, Marc Wulfraat, president of MWPVL International, a logistics and supply chain consulting firm, was quoted as saying.  Many e-commerce firms do not invest in making the returns process more efficient, as it does not serve the bottom line.  Although the speedier customer service is being chalked up as a sales tactic, the fact the company did not inform customers of the quicker web site customer service stands at odds with common marketing principles.  “Returns are viewed as a hidden cost, so many e-commerce companies make the process very difficult,” he added. “Returns are the first place to cut corners.”

The competition in customer service is tight, as Amazon.com, Inc. (NASDAQ:AMZN) offers instant refunds in some cases. Speed has its problems, as it puts the company at risk for fraud, the report noted, as some customers may not actually return the item.

Apple Inc. (NASDAQ:AAPL) saw a 24 percent increase in online sales in 2013 reaching $18.3 billion, Internet Retailer estimated.



About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com