Why Bother With a Recall?

Why bother with a recall? Well, if Peloton is any example, part of the plan might be to not worry about actually getting the product back. You don’t need to be a cynic to think that way, a history of recalls in general and the recent Peloton case in particular would be on your side in making that decision. The reality of recalls is that most consumers who own a recalled consumer product never find out about the recall. According to the Consumer Product Safety Commission, the average rates at which consumers participate in corrective actions are quite low: around 6 percent for all product types, with rates rising from about 4 percent for products with a retail price of less than $20, to about 32 percent for products with a retail price of $10,000 or more.

Peloton recalled around 130,000 of its treadmills in May, after initially resisting pressure from the CPSC to do so. But as we suggested at the time, evidence is mounting that despite safety warnings many customers have no plans to return their beloved, and popular machines. Peloton issued a recall it initially resisted after facing pressure from the CPSC to do so. This followed reports that a child died, and several children and pets were injured while using the treadmills. Peloton said it expected the voluntary recall of both its $4,295 Tread+ and $2,495 Tread running machines to be a $165 million hit to its future revenue.

But the reality of that recall might well turn out differently. In a recent survey of 100 Peloton Tread+ and Tread users conducted by Wedbush Securities, just 4 percent of Peloton Tread+/Tread owners said they planned to return the machine, while 8 percent were undecided. In recent conversations with Insider, other owners said they definitely planned to keep the machine. "I am NOT returning it. I love it, and even with an eight-year-old daughter and a dog in my two-bedroom apartment, it's not going anywhere," one Tread+ owner wrote in an email to Insider. Another owner said that the safety instructions were sufficient and that it was up to users to keep their kids or pets away from the machine.

Peloton owners may want to avoid returning the equipment because of its size and weight, while others may not want to leave it sitting unused and taking up space in their home. Finally, other loyal fans may be comfortable keeping the machine after Peloton added a new password lock feature known as “Tread Lock” that requires a four-digit code before using the treadmill and locks the machine after 45 seconds of inactivity.

The Peloton might be a unique case, for a variety of reasons. One is that the product is very large and the thought of returning it could be overwhelming for consumers — no matter how easy the company makes that process. The other is that it is largely a beloved brand and a beloved couple of products, with a community of users who are rabid fans. Many of those fans appear likely to dismiss the risk and/or take their own precautions rather than dealing with a recall.

So, now to you and the promotional products industry and the prospect of product recalls. The reality is that if you stay in the promotional products industry any time at all, it’s not a matter of if, but when, a failed or unsafe product will need to be recalled. While you never know what consumers are actually going to do in the event of a product recall, it’s important for your business and your customers to take precautions as it relates to the possibility of a product recall.

Part of the process of selling product should also be knowing how to get it back when something goes wrong. That means documenting where and when a failed product was made, what customers bought it, and having a plan in place to communicate and execute a transparent recall strategy if and when that becomes necessary.

So, what would your company do in a situation like this? The CPSC has required reporting requirements for failed products. The federal Consumer Product Safety Act requires that manufacturers, distributors and retailers ALL report a product that fails to comply with an applicable consumer product safety rule, or contains a defect that could create a substantial product hazard. Would the fact that you aren’t likely to get much product returned from a recall make any difference in your overall business planning?