the cost of handling customer returns, Marcia. This has to be figured into the equation, which I'm sure Joe had a firm handle on.

I do have a problem with this statement though...

> Finally, it's vital to note that for every
> dissatisfied customer who returns a product
> for a refund, there are probably two others
> who felt the same way but did not request a
> refund.

You are making an assumption that may or may not be true. I think much of it would depend upon how aggressive a merchant was in promoting a money back gurantee and how easy it was for a consumer was to return products. Plus there are different "degrees of disatisfaction", which would have to be discussed and analyzed.

Now I can tell you companies that market apparel via catalogs typically experience a 20-40% return rate, which on the surface blows the 10% rate that Joe suggests for the product category he was discussing (consumer electronics) right out of the water. Now how do those people stay in business? Easy, their margins are high enough compared to the cost of handling returns so that they make money.

Take care,

Mike Winicki