For most, if not all, basic organizational goals, the best way to achieve them is through customer satisfaction. However, it may be possible for a company to try too hard in this area, where it can actually harm them. This was what happened to REI, which is short for Recreational Equipment Inc. There are a lot of companies with return policies specifically for defective products, but REI went further than this.
They once had it so customers could return anything (which would be sold in the basement of their flagship store, and have the reason for the return on them) for a full refund and/or store credit, but this would get abused in several ways. That in turn, made REI reconsider and decide that they should only accept returns for merchandise purchased a year or less before returning it. They have also been insisting that there be actual proof of purchase instead of accepting them without question.
That was one of the ways that the old policy would be abused, ironically by the people it was meant to benefit the most. Another way was that sometimes things that were returned would not be usable anymore, but also not really defective. Examples ranged from a mother who returned a stroller simply because her children had outgrown it, to an old, dirty backpack that the customer just did not like anymore. The abusing of the system had led to a small decline in the firm’s profit, and the number of people doing it was growing. According to Richard Mellor of the National Retail Federation, “stores lost $9 billion from return fraud last year.” Keep in mind, REI did not use to insist on proof of purchase. In fact, there were people that were able to return goods to REI when they only had the company logo on them. As for the old policy itself, there were also others that had this.
Other companies that had this were Orvis and Patagonia. A reported example, at Orvis, was a customer returning some charred luggage. It is believed that, even though he had produced a newspaper article about the fire, they would have taken the luggage back either way, according to their director of corporate marketing, Bill Eyre. For Patagonia, it was that someone returned a shredded backpack and shirt after a stabbing incident. However, neither of these companies plan to change this policy, unlike REI. Even then, REI’s change may not be as far-reaching as it sounds like it is going to be.
It was reported that Senior Vice President of Retail Tim Spangler has said a significant majority of customers already return things within a year. This could still be for any reason, again as long as there is proof of purchase. And he said that they would still be accepting returns for defective products, no matter how old they had gotten. And in terms of REI versus other companies, even with these changes, they will probably remain relatively liberal with return policies. For example, according to “The Seattle Times,” Nordstrom has a limit of 30 days, albeit only at their Rack Chain, and others like Target and Walmart have a limit of 90 days for most of their merchandise. There were also other companies that had made their return policies less liberal, such as Costco. And it was reported that, though at first they were criticized heavily, shortly after there was very little of an impact on their business. Still, if other stores are able to maintain this policy, what could it be about REI’s customers that make a policy change so necessary?
According to the company, as stated by one of their regional vice presidents Rachel Ligtenberg, the problem is “‘some customers have just been a bit confused about the spirit of our policy,’” (the Wall Street Journal). It was also reported that some, like a backpacker named Ron Seuss, say it was a cultural change, in the sense that now people try taking advantage of certain opportunities. No matter the reason, REI must adapt to its environment, like anything else.
This proves that a few bad apples can ruin the entire bushel. And they say that when you give somebody an inch, they are going to take a mile. Therefore, what can come from this is two things, as stated previously, a business can try too hard to make customers happy, so survival requires a balance between the parties of interest, like a ship. Second, is also about restraint, but now for the customers. One should not take for granted something as lenient as this policy was, “don’t bite the hand that feeds,” as it is. Businesses need to be able to trust their customers, otherwise they would have to get stricter, and the customers may not want that.