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Why We Require Demo Deposits

Ian asks: “Why do you charge a deposit for demo racquets when nobody else does?

It’s a good question. But it’s not entirely a fair question.

First of all, the majority of sporting goods stores do not offer racquet demo programs. Most of those who do are pro shops that are set up in clubs where members are present and can easily demo a racquet and bring it back in a couple of hours. So the pro shop treats the demo program like a extra service for its dues-paying members.

There simply aren’t a lot of free standing retail stores that offer demo programs. Those that do typically offer a very small number of frames for demo and charge full retail price for the frame at the point of sale.

Racquet Network, by contrast, offers a large range of frames for tennis, squash, badminton and pickleball. The vast majority of these frames are new — from the current season — and most are on sale. On our wall today, for example, we have nearly 100 frames for our customers to demo.

So back to the central premise of Ian’s question: “Why do we charge a deposit for demo racquets?”

Terms of Service

First, let’s be clear. Not only do we require a deposit, but our Terms of Service further specify that the deposit is refundable only as a store credit and that that credit can only be applied to the purchase of a racquet.

This is clearly laid out on our website in the Terms of Service. It is clearly stated in all of our brochures about our demo program. Our staff clearly explain this to everyone who takes out a demo racquet. And just to be sure that everybody understands the Terms of Service, everyone who takes out a demo racquet signs a card indicating that they understand and agree with these terms.

We do this because we want to make it absolutely clear that the only people who should be taking out demo racquets are people who intend to buy a racquet from us.

Lessons Learned

Sadly, we didn’t always do things this way. When we first opened our store, we didn’t take a deposit at all. In fact the first summer we were open, a young man (Alex) and his father (Ivan) took two tennis racquets out for demo the first week of July. They didn’t return the them until the last week of August.

Two days after returning them, they brought in two of the same racquets that they had just purchased at Sport Chek and asked us to string them. So to sum up, we provided the service. They used our racquets all summer and decided that they liked them. Then they returned the demos to us and bought new racquets from a store that did not offer them a demo service.

Needless to say, we learned a lesson. From that point forward, we had a one-week limit on racquet demos. But we weren’t done yet. We had a few more lessons to learn about how some players abuse unconditional demo programs.

Lesson Two

Lesson Two started the following winter and continued over the next two years. A customer who worked up in Fort MacMurray came in to demo a badminton racquet. He worked up north all week and played badminton on Wednesday evenings, then came home every weekend. Over the next two years, he came into the store almost every weekend, returned one racquet and took out another. Eventually, he returned his last racquet and stopped coming. We never saw him again.

From that point forward, we started charging a deposit for demo racquets. We figured if we were going to bear the material costs of maintaining demo racquets and the personnel costs of tracking them, we should require customers to spend some money at the end of the process.

Lesson Three

Lesson Three in the demo-racquet-school-of-hard-knocks came in our second winter operating as a full service racquet store. By this time our demo program was rocking. On any given day we had 20 to 30 demos out and a list of people waiting for the most popular racquets. Our demo program was so active that the staff at our racquet tech desk would spend about 30 per cent of their shift on demo racquets. In fact, they were so busy tracking demos that they often didn’t have time to string racquets.

At the end of that season we analyzed the data from our demo program and learned three new lessons.

Lessons Four & Five

Lesson Four: Less than a third of the customers who demoed racquets ended up buying one. In most cases, they just turned their store credit into string for their old racquet. Some turned it into shoes, which they were going to have to buy anyway. This analysis made it clear that most customers were just demoing so that they could use our racquets while theirs was getting re-strung. In other words, most players were using our demo program as a free rental service.

Lesson Five: Customers who did intend to purchase a racquet from us often had to wait two weeks or more to get their hands on popular demo racquets because they were being used by players who didn’t intend to buy them. In fact, our analysis determined that customers who demoed but ultimately didn’t buy were twice as likely to keep the demos out longer than they were allowed to and three times more likely to return demo racquets in poor condition.

Lesson Six

Lesson Six: The final lesson we learned about demo racquets that season was perhaps our most important. We learned that customers who demo and then buy usually do so within two weeks of starting the demo program. By contrast, customers who spend more than a month in the demo program, rarely buy a new racquet. So what exactly are we accomplishing here? Quite clearly, a demo program that lasts more than a month isn’t serving the customer and it certainly isn’t benefiting our business.

Lesson Six was critical to our thinking about our demo racquet program. It was at that point that we realized that we had to create some new rules that would keep our demos out of the hands of people who were unlikely to buy so that customers who did intend to buy would be able to try them immediately.

What We Learned

Lesson Six led us to two important new conclusions about our demo program.

Conclusion 1: The purpose of a demo racquet program is to give customers who intend to buy a racquet from us an opportunity to try that racquet. So it is up to us the ensure that that racquet is available for them to try when they want to try it. If that racquet is out being used by players who do not intend to buy a racquet from us, then we have just failed our customer.

Conclusion 2: If we offer free racquet demos to people who do not intend to buy from us, so many people take advantage of the program that we end up spending a fortune managing our demo inventory. As a result, we will have to raise our prices across the board.

In the winter of 2017 we changed our rules and created a brand new demo program to serve customers who intend to buy a racquet from us. This new program, briefly described at the start of this article, makes it clear that players who do not intend to buy a racquet in the next four weeks should not take out a demo racquet.

Our New Demo Program

Our demo program is offered as a service to customers who are in the market for a new racquet. It is not a loaner program. It is not a program under which you get to take out a new racquet while your old racquet is getting re-strung. The highest priority of our new demo program is the ensure that customers who want to purchase hot new racquets have an opportunity to try them, which means they need to be available when the customer wants to try them.

Players who want to use loaner racquets can do so. We have a program for that. It is available to all members of Squash Calgary, Tennis Calgary, Badminton Calgary and Pickleball Calgary. But is a different program entirely from our demo program.

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Countering Yonex Counterfeit Fraud

CounterFeit4The expansion of Chinese consumer websites into the North American market in recent years has led, in our industry, to a massive increase in the incidence of counterfeit fraud. As a result, Racquet Network has policies in place to protect our customers from having to share the financial burdens associated with this petty crime.

Counterfeit fraud is most common in badminton and pickleball with Yonex ™ and Manta. However, we have seen incidents in other racquet sports as well.

Here is how it works. A customer purchases a counterfeit frame from a counterfeit website (or app) such as ALIEXPRESS for $50.00. They then bring the racquet in for us to string. Of course, the frame is a garbage counterfeit, so it snaps while we are stringing it. When we contact the customer to tell them this, they act surprised and demand that we replace their $50 counterfeit with the real thing (say $275.00).

If the scam works, they end up paying $50.00 for a $275.00 Yonex badminton frame. If it happens more than once or twice, we have to raise our prices. So honest customers end up paying more for everything — which isn’t fair at all.

Fortunately, there are ways to tell counterfeits from the real thing. All racquet technicians at Racquet Network are trained in counterfeit detection. And we also have policies in place to deal with counterfeit fraud.

While we are willing to string counterfeit racquets, our Terms of Service place the risk for doing so squarely on the shoulders of the customer. Counterfeit racquets are not covered by a warranty of any kind. Should a customer bring a counterfeit racquet in for service and should that racquet break while we are stringing it, we will not replace the racquet, we will not refund the cost of the string or any installed parts and we will not refund the labour.

So scammers beware. And customers beware too. As our daddy used to tell us, if someone offers you a diamond ring for ten cents, chances are you just bought a diamond ring that isn’t worth a dime. So don’t be tempted by the deals you see on discount websites. If you want a genuine Yonex badminton racquet or a genuine Manta pickleball paddle, make sure you buy it from an authorized dealer. You will pay more, but you will get the real thing.

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Warranties, Returns and Other Pickleball Gripes

stamp-out-fraudMost people don’t think much about return fraud or warranty fraud. And why should they? Most people are honest, so they aren’t affected by such nefarious things. Right?

Wrong. Warranty fraud and return fraud impact honest people more than dishonest people. While dishonest people benefit from these common types of retail fraud, honest people pay the price.

Let me give you an example.

Approximately one per cent of customers are “serial returners”. This means that they return more than half of their purchases. In the pickleball world, this is the kind of person who buys a paddle, plays with it, returns it to the store to exchange it for another one, plays with that one for a while and then returns it again.

They may eventually purchase one paddle, but in the process they have used and returned two or three or four. Of course, the returned paddles are not new and cannot be sold as new, so the cost of these paddles is passed along to honest customers in the form of higher margins.

Serial returners and their cousins, “frequent returners”, make up only six per cent of the population, but they account for about 90% of the costs associated with returns and exchanges while the remaining 94% of retail customers — the honest people — collectively account for only 10% of the costs of returns. The numbers for warranty fraud, meanwhile, are equally disturbing.

What is warranty fraud? Here’s an example. Earlier this year we got an email from a loyal customer and friend who has shopped with us for years. He warned us to expect a visit from an angry customer (we’ll call him Ben) in the next few days. Apparently, Ben had purchased a paddle from us two weeks earlier that he no longer liked and wanted to return.

Unfortunately for Ben, there was nothing wrong with the paddle. So after discussing it with some of the players in his group, Ben decided to heed some bad advice and take matters into his own hands. Before he went home that day he smashed his paddle into the top of a gate post several dozen times until the surface was dented and damaged beyond repair. A few days later he came into our store asking for warranty coverage, claiming the damage was done by nothing more than playing pickleball.

This is a classic case of warranty fraud. The customer decided he wanted a new paddle. He also decided that he wanted somebody else to pay for it. So he faked a warranty claim. Sadly, he is not alone.

The Canadian Retail Council estimates that shrinkage due to return fraud, warranty fraud and other forms of fraud costs retail stores more than $4 billion annually. They estimate that just under 19% of all retail purchases are returned. In fact, return/warranty fraud alone accounts for about nine cents of every retail dollar spent.

In other words, honest people pay about 10% more than they should because big box retailers make it easy for dishonest customers like Ben with easy return/warranty policies. For pickleball players, this works out to about $8-10 per paddle and about 40 cents per ball.

Here at Racquet Network, we have taken a stand against return/warranty fraud. In order to ensure that we can charge the lowest possible prices, we have very restrictive return/warranty policies. As a result, we have reduced incidents of fraud to lower levels than most retail sporting goods stores.

At the same time, we have also developed fair demo programs that allow honest customers to try before they buy. We have also added online product reviews to our website so that customers can share their opinions of products with other customers and do some research before they spend any money.

On top of this, most of the products that we carry are covered by a manufacturer’s warranty of some kind. So if something does go wrong for a legitimate customer, there are ways for them to get replacements for genuinely defective products.

None of this matters to serial returners or warranty fraudsters, however. In their minds, they are doing nothing wrong. And they are not shy about saying so. In fact, a recent US study found that serial returners are 40 times more likely to post a bad review about a store or a manufacturer after a failed return attempt than a happy customer.

So the next time you are gathered with your pickleball friends listening to somebody complain about how a retailer did them wrong, ask yourself this: who is the real problem here? Before you judge the retailer, maybe you should gather some facts about the customer.