Costco Revises Return Policy

February 27, 2007

CostcoAs a consumer and retailer I find myself looking at both sides of the coin on a pretty frequent basis. I of course, like you, want the best product at the lowest price available and with great customer service, should I run into any unforeseen problems with the product. It appears as if Costco has learned the hard way that sometimes it’s difficult to juggle all three at once that is at least one of them.

Costco has decided to change their very lenient return policy on consumer electronics, due to the increased amount of returns on HDTV sets in the last year. The previous return policy allowed a full refund for any merchandise purchased, without a set time-frame, except for computers which had a 6-month return policy.

According to Richard Galanti who is the Chief Financial Officer for Costco, the new 90-day policy for refunds on televisions, computers, cameras, camcorders, iPod/MP3 players and cellular phones, is in effect in their California locations and will be implemented in the other stores across a 5 week period.

Costco will also extend the manufactures warranty from one year to two years, on televisions and computers. Any electronics purchased before the new return policy, will still be able to get a full refund without a time limit. “Our view is, even with these changes, we still have the best return policy in the retail industry,” Galanti said.

As a consumer I can’t say this affects me all that much as I don’t shop at Costco but as a retailer I really empathize with them here. Let’s face it, we’d all love to be able to return defective goods 60, 90, 120 days or more from the time of purchase but as with any liberal exchange policy, a few bad apples are bound to spoil it for the rest of us. It’s no real secret that some customers were abusing the policy as their own personal upgrade plan.

I’ve heard first-hand accounts of Costco customers buying projectors, keeping them for up to two years and returning them when the lamp dies. Now don’t get me wrong, this was Costco’s policy and they’re well within their right to change it but one has to wonder why the potential for abuse didn’t factor more heavily into their policy in the first place.

The bottom line in my opinion is this; both consumers and retailers have to protect their interests in any transaction. Costco got burnt with a liberal exchange policy but in the end so did the consumer. That part is a bit of a loss for the consumer but again as a retailer I’m happy to see the playing field a bit less lop-sided; it’s one thing to be competitive with warehouse clubs on price, it’s quite another to try and compete with an open-ended return policy.



Posted by Bryan Greenway | | Filed Under Commentary


Comments

  • Todd

    My guess is that once Costco started selling higher volumes of more expensive consumer electronics, like HDTVs, they started seeing higher abuse rates of the return policy. I shop at Costco once every month or two, and this policy change will not change my shopping habits.

  • Todd

    My guess is that once Costco started selling higher volumes of more expensive consumer electronics, like HDTVs, they started seeing higher abuse rates of the return policy. I shop at Costco once every month or two, and this policy change will not change my shopping habits.

  • westcott

    This topic kind of reminds me of the policies now being implemented by most of the Chinese Buffets here in the Houston area.

    They will charge you for uneaten food left on yor plate and most have eliminated boiled shrimp and crab from the offering.

    You know the ones. You walk by their table and all they have on their plate is boiled shrimp piled high. They are the same inconsiderate people that ruin it for the rest of us.

  • westcott

    This topic kind of reminds me of the policies now being implemented by most of the Chinese Buffets here in the Houston area.

    They will charge you for uneaten food left on yor plate and most have eliminated boiled shrimp and crab from the offering.

    You know the ones. You walk by their table and all they have on their plate is boiled shrimp piled high. They are the same inconsiderate people that ruin it for the rest of us.