who pays when the product is defective?

[retteas]

this is something i have wondered. lets say a factory makes shoes and sells a shoe to a store and the store sells the shoe to a customer and the customer finds the shoe to be defective. so the customer gets a refund and now the shoe (which is unsellable) is back at the store. does the store take the loss? or can the store get a refund from the factory? can someone explain it to me?

[MrKap]

I can explain how I as a consumer have witnessed a policy change with a popular electronics store.

Initially I bought a set of headphones, and I got the 3 year warranty because it was a no name brand. So for 3 years I could exchange it for a brand new pair if it broke. Well, it broke about total of 4 times in 3 months to point where it was unusable. So I bought a new pair, a proper brand name as the ones I purchased originally was horrible. The poor materials it was made from, makes me think every single one was returned if the warranty was purchased, they were that bad. I bought another pair, because it was such a hassle to constantly return a broken one, not because the warranty had ended, or exceeded its limits.

So... about a year later I bought something from them, and I purchased a top name brand item and was offered a 3 year warranty again. Only the this time there was a limit on the number of returns allowed.

So... my guess is that in some cases the warranty is a manufacturers warranty and the rest of the time, the store eats the costs, extending the warranty offer.


So, the factory eats the cost, when it's a manufacturers warranty, the store probably eats the costs when it is an extended warranty.

this is something i have wondered. lets say a factory makes shoes and sells a shoe to a store and the store sells the shoe to a customer and the customer finds the shoe to be defective.

That's probably where it starts to reach a grey area. For instance, not all shoes are made the same. Let's say a customer bought a pair of shoes, wore them, liked them but then one day ripped the soles off.

That might not be a defective product, but rather someone who does a lot of running. Who knows? Maybe they were walking on some sort of hot surface that would destroy 50% of the shoes on the market? What exactly is defective, if you purchased the item after examining it?

If you buy something without a warranty, you eat the cost, a lot of the times. Especially when it is clothing, or wearable items.

Hope that helps.

[flafson]

A factory that respects itself will give the store credit.

If the store does some shady dealings to get a better deal then who knows, the sky is the limit.

[EPcjay]

Stores aren't required to honor the manufacture's warranty past it's return policy.

[retteas]

i wasn't talking about warranty, i meant when a return is done within the 30 day return period and the returned item is unsellable.

[sguptaet]

I come from a wholesale/distribution background. Here is what I know.

It ultimately depends on the negotiated deals between the factory > middle men > retailer. Middle men include importers/distributors/wholesalers. Sometimes there is no middle men. So there could be multiple deals negotiated down the chain. We were importers.

For independent retailers (non-majors), we always refunded defects and told the retailers to discard the product.

For majors, there is generally a contract put into place called a vendor agreement (VA). The VA will specify the terms for defective products. In my experience, it came down to a negotiating a percentage discount. So the VA will say "x% rebate for defects". It makes life easy because the retailer can just discard the defects and not have to worry about shipping product back.

Going back up the chain, we were importing from factories, mostly in China. And again, we didn't have a lot of power so we simply absorbed all the costs of defects.

So to answer your question, it depends on how much negotiating power the supplier and buyer have.

Theoretically, I believe the source of the defect should pay, which is the factory. I guess in the overall scheme of things they eventually do via price, repeat orders, etc.

This is probably different for various product categories. We sold low-mid end gift/souvenirs. With high end product or electronics it may be different.

[TrevorK]

With Canadian Tire they would accept the returns and the manufacturer would reimburse. Each manufacturer has different rules as to whether the item needs to be shipped back to them or if the store is able to destroy it themselves. I'm sure this is the way that it works with many major retailers.