Forty percent of smartphones returned through the supply chain...

Forty percent of smartphones returned through the supply chain are “no-fault-found” returns, Jim Hunt, senior vice president, business development at Genco, a third-party logistics provider for the CE channel, told Consumer Electronics Daily. Genco, which handles the product returns for AT&T Wireless and U.S. Cellular, makes “plug-and-play” repairs to phones including jack and display replacement, but not soldering work, Hunt said. The company is working with carriers on what Hunt calls a “recent phenomenon” owing to increasingly sophisticated phones. “Four out of 10 phones that are returned don’t have anything wrong with them,” Hunt said. He described a “fairly significant level of buyer remorse” due to customers not understanding the complexities of the latest generation of smartphones. “It’s easier to say it’s broken than to admit they don’t understand how the phone works,” he said. The occurrence is particularly evident with Android phones because of the open architecture that allows users to download “any number of things,” he said. Games are a major culprit because they consume a lot of storage, and the closer a phone comes to reaching storage capacity, “it slows down to nothing,” said Hunt. “They come back and say the phone isn’t working so take it back,” he said. Under the current retail model, the staff members at wireless stores are motivated to sell accessories, not provide customer support, he said. “It’s easier to take the phone back and give them another phone rather than help a customer resolve an issue,” he said. Hunt worked with a consulting company to determine the cost of no-fault-found returns to carriers and found “a $100 bill gets wrapped around every one that loops its way into the return process.” OEMs don’t assume responsibility for the returns because they're not due to defective product, so “carriers are absorbing cost and it’s killing them,” he said. Genco is seeing fewer returns because phones have a longer life cycle than they did three or five years ago. “If you look at Samsung and Apple phones, fewer folks are flocking to the next new model than they did three years ago because the changes are more incremental,” he said. “People are holding on the units longer.” Genco gleaned that through the number of returns it sees from AT&T and U.S. Cellular due to fewer phones being sold, and less “repair incidence” per phone due to smartphones that are “more robust and sustainable,” he said.