December 31, 2004
Retail's Holy Grail: One-Stop Returning
By Evan Schuman, eWEEK
You're cleaning away papers that accumulated during the holidays and find a portable CD player that is identical to the one you use every day. It was given to you as a gift and you have no receipt, nor any clue where it was purchased.
On a whim, you take the CD player to your favorite local retailer. Customer service scans the item, reports to you the date it was purchased and the name of the retailer it was purchased from, tells you that the other retailer's rules give you four more days to return it, and hands you a freshly printed receipt for you to use for that return.
That little-known capability is available today at some of the nation's largest retailers, if the consumer knows about it and if the retailer wants to offer it in that way.
This is thanks to a huge centralized database from a company called Siras, which is a wholly owned subsidiary of Nintendo. One of the reasons it's so popular with retailers is that the service is free to them, as it is entirely paid for by a large group of major manufacturers, including Compaq, Bissell, AT&T, Apex, Emerson, Fujifilm, General Electric Co., Hewlett-Packard Co., Magnavox, Panasonic, Phillips, RCA, Sony, Sega, Sylvania and many others.
Currently participating retailers include Wal-Mart, Amazon.com, Best Buy, Circuit City, CompUSA, Fry's Electronics, JCPenney, KB Toys, Kmart, RadioShack Canada, Sears, Toys R Us, Babbages and Spiegel.
The system has its limits. First, it's limited to selected products from sponsoring manufacturers.It's also limited to participating retailers, and each retailer can select how much information it will share with product-returning consumers.
Siras' efforts are sidestepping the controversial efforts of another database-based returns company, The Return Exchange. The Return Exchange, which has incurred the wrath of one U.S. senator and various privacy groups, allows retailers to track returns by customer.
In theory, The Return Exchange's database would allow a retailer to quickly identify frequent returners (especially those considered possibly fraudulent) and block their efforts. Sen. Chuck Schumer has attacked the database as enabling "secret store blacklists."
Siras' efforts are very different. Its system is entirely customer-agnostic, providing the full anonymity that privacy advocates have been insisting on. Siras' database identifies only the products, not the customers, said Siras President Peter Junger.
"We go through great pains to not collect any customer information whatsoever," Junger said in an eWEEK.com interview. "We simply take the fingerprint of the product."
That fingerprint is the company's unique product identifier, which is primarily a combination of the UPC number and the product's serial number. The Siras database—which is housed only at the main Siras facility in Redmond, Wash.—is integrated into the retailer's existing POS system.
The product's unique identifier is then married to data the system picks up from participating retailer POS systems, such as the date the product was sold, the store name, the store number and even the selling employee.
"We also know that retailer's terms and conditions for that sale and their returns policy," Junger said. Those policy issues are also married to the product's code, allowing the system to not only know when that item was purchased, but whether that date qualifies for that product to be returned to that retailer. The manufacturer adds in its information to the database, too, so that the system can know, for instance, what accessories the product shipped with.
The system can also memorize the identification of any employee who processes a return, to assist with fraud prevention. Junger said one retail employee discovered that capability when he was charged with theft by processing beyond-the-term returns for a friend.
The database is typically accessed by the POS system over the Internet to a secure server, but when the network is down—and for retailers who do not have Internet access—a toll-free number uses voice recognition to replicate the online information.
Siras' system differs from The Return Exchange's system also in that can be more easily positioned as truly helping consumers, who often lose receipts. "Just as often, our system helps consumers that actually want to return an item legitimately. It's not exactly a duplicate receipt, but it does function as a proof of purchase," Junger said.
The ability to quickly identify the included accessories is crucial, Junger said. He described a popular scam where a thief purchases two identical digital cameras, ostensibly to give away as gifts. Each camera comes with a very nice and expensive Flash memory card. The thief carefully removes the card from one box and replaces everything else. The next day, he presents the complete box for a full refund. With that accessory list on the POS screen, clerks would know to check for the card.
Not only is the store ripped off the price of that memory card, Junger said, but the box is likely to go back on the shelf, and the next consumer will get no card with his or her purchase.
The database is not solely of interest to retailers. Junger said some police departments have started using it to pursue theft charges against people who say that allegedly stolen material was actually purchased. The accused, for example, might say he bought the product at a particular store during a particular month. A quick scan now allows the product to testify to its own version of its history.
Siras and The Return Exchange do share one thing in common. Executives with both companies argue that their databases help retailers administer their own return rules consistently, removing the arbitrary decisions of store employees. And when the decisions are "no," both databases take the argument away from the store and to the distant database firm.
Junger cites consumer studies that shoppers actually prefer stores with consistently administered strict return policies over inconsistently administered lenient return policies. With inconsistent policies, consumers feel the need to argue and push for the store's discretion, which is generally unpleasant to all, Junger said. A strict policy—even if it means fewer returns—is preferable as long as consumers believe it will be handled consistently, as it removes doubt.
"That's good news right now, as shoppers gorge themselves with [post-holiday sales items] that they may or may not want," he said.