Dan Warne20 September 2006, 4:27 AM
Australia's biggest computer retailer, Harvey Norman, has criticised Apple over its restrictive warranty policies. It also says in general, computer industry warranty policies fall short of what's required by Australian law.
Computer makers and distributors have such restrictive product return policies that retailers would breach the Trade Practices Act if they followed them, major retailer Harvey Norman has charged.
The retailer’s General Manager of Computer Merchandise, Rutland Smith, said manufacturers often have worldwide warranty policies that fall well short of what’s required by Australian law.
“They’ll try to limit D.O.A. [dead on arrival, or faulty when purchased] periods to a specified time like 7 or 14 days, or they’ll try to put in place different hurdles for us to get a credit note for the faulty product.”
“The Trade Practices Act says that if a product is not fit for the purpose for which it is sold, then the customer is entitled to their choice of refund or repair, and there is no time limit.”
“These rights also pass across to the retailer - we have the same rights against a vendor.”
Some vendors make it difficult for retailers to get their money back after a customer has returned a faulty product, Smith said.
Smith named Apple Computer as a particularly obstructive vendor when it came to warranty terms, and said this was one of the reasons Harvey Norman did not carry a full range of Apple hardware.
Harvey Norman had repeatedly asked Apple to change its iPod return process which instructs customers to return faulty iPods directly to Apple by post.
“We’ve instructed our stores to resolve problems in accordance with the Trade Practices Act and handle stock problems with Apple at a later date. But so far we’ve found Apple to be particularly uncooperative.”
Apple Computer Australia disputed Smith’s claims. Spokesperson Fiona Martin said “Apple does nothing that prevents any retailer from meeting their obligations under the Trade Practices Act. The Australia Post facility is available for customers that prefer to send their iPods directly to Apple. That doesn't mean they can't take them into a retailer for a refund, which Apple will in-turn provide to the retailer.”
Smith said, “They don’t prevent us from offering a full refund to customers, they just make it very difficult for us to get a refund from them later,” he said.
Smith said Apple was able to be arrogant over its policies because no major retailer could afford not to sell the iPod.
But Apple’s margins were so low on many products that Harvey Norman wouldn’t make money selling them given the additional cost of subsidising the cost of customer returns.
“Apple has consistently undervalued what the channel does for its product,” Smith said.
“It’s simple business: if it costs X dollars to market the product and put it on the shelf and the margins are less than X dollars, it’s simply not commercially viable.”
“We have over 100 vendors, with over 100 different returns policies. All of our major stores have at least one dedicated staff member devoted to obtaining returns authorisations from suppliers. On that very rough analysis it costs us millions of dollars a year.”
“I should add, that’s an expense we are prepared to bear in the name of good customer service.”
Rutland said despite its market power in Australia, Harvey Norman was not generally in a position to influence computer makers’ warranty terms.
“We’re a large organization in the Australian market, but Australia is a small part of the international marketplace. Most of those product return policies are driven out of international offices. Yes, we can negotiate strong pricing, but a lot of these types of policies apply worldwide.”
Smith made the comments during an interview with Dan Warne at the MediaConnect Influence 2006 forum. APC attended the conference as a guest of MediaConnect.