“Damaging reputation for companies that get off badly”: Expert on the Digitec-Galaxus coup

Big words: It’s only been a few months since Migros announced the “biggest innovation in the company’s history”. The Migros subsidiary Digitec Galaxus is now also celebrating a ‘world premiere’, the company rejoiced on Thursday.

For products, the online retailer now shows how often customers return the goods, how often the products break down during the warranty period and how long it takes for a warranty case to be resolved.

Darius Zumstein, ZHAW lecturer and head of the e-commerce lab, describes the development as “amazing”: “If you have to choose between two equivalent products, you can now clearly choose the one with fewer returns or with a shorter warranty processing time.” he tells Watson.The innovation of the online retailer would show how targeted and value-adding the company can use its own data.

“Would risk reputation”

One thing is clear to the online trading expert: Digitec Galaxus lays the cards face up. “Everyone benefits from the transparency: the company receives fewer returns and customers have fewer products to return,” says Zumstein. This would save big costs. “How strong the effect is remains to be seen.”

Sarah Stalder of the Consumer Protection Foundation is happy with the change at Digitec Galaxus. The odds would represent important information. “This is a good example that I hope will catch on,” she wrote when asked by Watson.

But only as long as it’s implemented without being influenced: “Providers shouldn’t be able to buy a better position on the list,” Stalder points out. Otherwise, customers would be manipulated in their purchasing decisions.

“The online retailer would only risk its reputation with false information,” says Darius Zumstein. He therefore does not believe this is possible – certainly not with a subsidiary of Migros. But the new transparency brings other problems.

“It will be exciting to see how the manufacturers of the products listed on Digitec Galaxus respond to the innovation,” says the e-commerce specialist. “When producers realize that their goods are returned most of the time, they have to change something to stay in stock,” he says. They would be under pressure. “Manufacturers with bad quotas will sooner or later disappear from the market.”

Those who come off badly in the lists have even more problems. “That can damage the market and reputation,” explains Zumstein. But the manufacturers wouldn’t be able to do much. According to the ZHAW teacher, they only have two options: either the producers work on the quality of the products or they sue the online retailer. “The chances of success are probably relatively small,” he says.

Manufacturer: No comment

watson tested Digitec Glaxus’ innovation and asked several manufacturers who had done poorly in certain categories. For example, Microsoft occupies the last place in the declarations for ‘smartphones’. The group merely replied to several submitted questions: “Please understand we are not commenting on this.”

In the “USB cable” category – the product that was the online retailer’s second best-selling product in 2021 – the electronics company Logitech did particularly badly, with a 123rd place out of 126. They also declined to comment on that the innovation of Digitec Galaxus. Four other manufacturers asked also declined to comment.

Darius Zumstein is convinced that the innovation of the Migros subsidiary was a declaration of war on the competition: “Digitec Galaxus now has a great competitive advantage. Other online retailers should consider whether they also want to measure the return and guarantee rate and make it available to customers .

When asked by Watson, Swiss online retailer Brack.ch declined to say whether Digitec Galaxus’ new system would lead to more sales. But he writes about the quota system: “We internally monitor product and supplier warranty quotas for our customers. If these do not perform well or deteriorate over time in comparison, it means we are drawing the supplier’s attention . or manufacturer to do so.” In the worst case, the product is removed from the range.