Notes on product returns
I’ve been thinking on and off for about two years about reducing product returns in consumer smart home hardware, specifically brands like Ring and Arlo that pair devices with subscription services. Here’s a distillation of my thoughts.
Product return is a lose-lose outcome
From the customer’s perspective
Somewhere between the decision to buy and the decision to return the product, the perceived value of the product changes. What new information do they discover? How do their needs change? Whatever the reason, I can assume that the customer feels regret. In an extreme case, I can imagine the customer’s mood going from hopeful anticipation to bitter disappointment. And on top of all that, they have to go through the drudgery of returning a product.
From the brand’s perspective
Not only are they losing a sale that they already made, they also have to bear the cost of returns management: reverse logistics, returns processing, rework, restocking, and more.
The hardware + subscription model raises the stakes
The doorbells and cameras work fine without a service plan, but the most desirable features like cloud recording, emergency response, and smart notifications are only available to paid subscribers. The hardware is the entry point and the subscription is where the long term value lies, so a return forfeits the lifetime value the hardware was meant to unlock.
Funnel model for diagnosing returns
A purchase funnel modified to accommodate a hardware + subscription business model can provide some structure to the diagnosis of return reasons. Returns within the standard return window tend to happen somewhere along stages 4 to 6.
The funnel
- Awareness
- Consideration
- Purchase (hardware)
- Unboxing
- Installation and onboarding
- Trial
- Conversion (services)
- Loyalty
Common return reasons
Immediately before or after unboxing:
- Bought the wrong thing
- Pricing/promotions
- Competition
While installing or onboarding:
- Unable to install, e.g., unable to drill into a wall to mount a doorbell
- Incompatibility with home environment, e.g., Wi-Fi signal cannot reach an outdoor camera
- Incompatibility with other smart home devices
- Software issues
During the trial:
- Product performance
- Total cost of ownership
Additional commentary on select return reasons
Bought the wrong thing
Customers sometimes only skim through product descriptions before a purchase, and they end up with an idea of the product that is more informed by their mental model of similar products instead of the definitive specifications on the product detail page (PDP) or packaging. For example, they might buy a wired security camera that requires continuous power to function, thinking that it’s a battery-powered camera. This often leads to a return.
The returns that result from buying the wrong products can sometimes be incorrectly attributed to compatibility issues. For example, if someone shopping for an iPhone 13 charging cable, an older model that uses the Lightning connector, buys a USB-C charging cable, the issue that they encounter is one of compatibility, but the root cause is that they bought the wrong thing.
Keeping new launches, legacy products and their accessories on sale at the same time is an even bigger source of this confusion. A customer who owns last year’s camera can easily land on a mount, battery or cable that only fits the newest generation, and the product names rarely make the difference obvious. The fix starts with managing product lifecycles proactively: retire older models on a clear schedule, and make the generation unmistakable on every listing.
Ultimately, it’s up to brands to meet customers where they are. That means designing e-commerce product pages and packaging artwork with the understanding that customers will not read them carefully, if they read them at all. Any product attributes that could lead to a dealbreaker-level misunderstanding should be highlighted.
Total cost of ownership
Total cost of ownership (TCO) is the initial purchase price of the product combined with all ongoing costs incurred during its entire lifespan. If someone wants a wire-free security camera plus all the features afforded to them with a service plan, the cost of the service plan over the lifespan of the device can easily exceed the cost of the hardware.
Take Ring, for example: the cost of the most basic Ring Solo service plan is $4.99/month or $49.99/year, and it only covers one device. That annual subscription is actually more expensive than their latest Battery Doorbell 2K, which can be bought right now at a promotional price of $39.99 ($99.99 MSRP) from their direct to consumer website. The prices are accurate as of October 2026.
Sometimes customers are caught off guard by this. Someone who is unaware of the service plan when they decide to buy a video doorbell or camera will be in for an unpleasant surprise when they realize that the device they just unboxed has a TCO that is much higher than initially estimated if they want to use all the features. Perhaps that TCO is higher than the value they get from the hardware + services. And without a service plan, the hardware alone does not offer the features they are looking for. Either way, they return the product.
Gathering intelligence
Both customers and the products returned by them offer useful signals that help brands understand the drivers behind product returns.
Ask the customer
Brands that sell direct to consumers are in a great position to gather customer feedback about returns, because they generally have full control over their DTC RMA process, and therefore can design that unavoidable RMA touchpoint to collect customer feedback. The exact questions asked at that point will depend largely on the brand’s strategy.
One thing to keep in mind is that a survey that sits between a customer and their refund exists more to serve the brand than the customer. There is a trade-off between survey complexity and customer experience. A lengthy survey could irritate customers, but an oversimplified survey risks failing to capture meaningful data. In any case, some customers will engage in survey satisficing, filling out the survey arbitrarily just to complete the RMA process, and that will impact the quality of the survey data.
Ask the warehouse
Does it look like customers tried using the products before they returned them? That is a piece of data that can be captured during the rework or refurbishment process. If the warehouses are tracking the serial numbers of inbound and outbound devices, that might be useful for associating individual devices with specific user feedback.
Ask the cloud
Cloud telemetry data is a data source unique to smart home devices that talk to a server. Did the device ever come online? Did it finish onboarding? These are all useful queries to run when trying to infer why a product ended up being returned. A unit that never connected points to stages 4 to 5 (unboxing, installation), while a unit that connected but sat idle points to stage 6 (trial).
How to minimize return rate
Easier said than done.
- Design PDPs and packaging to guide customers to buy the right product.
- Retire legacy products on a clear schedule and keep the accessories catalog lean.
- Manage pricing and assortment to reduce price-driven returns and repurchases at lower promotional prices.
- Help customers assess physical and technical compatibility.
- Be transparent about features exclusive to subscription plans and recurring costs.
- Offer hardware that is reliable and simple to set up.
- Offer services that are consistently worth more to customers than what they paid.