merchandising ethics , accounting homework help
I need 2 substantive responses to the discussion posts attached below from my fellow classmates. Minimum 50 words. Responses should be brief and substantive.
Amy Martin is a student who plans to attend approximately four professional events a year at her college. Each event necessitates a financial outlay of $100 to $200 for a new suit and accessories. After incurring a major hit to her savings for the first event, Amy developed a different approach. She buys a suit on credit the week before the event, wears it to the event, and returns it to the store the next week for a full refund on her charge card.
Address the following in your response:
- Comment on the ethics exhibited by Amy and possible consequences of her actions.
- How does the merchandising company account for the suits that Amy returns?
Ethically speaking, the merchandise should only be returned if it is flawed somehow or if it she thought it would look or fit a certain way and it didn’t, but before wearing it out. However, Amy buys the clothes fully intending to use them for her events then return them.
I have found nothing to indicate that this practice is illegal. In fact, it is and has been quite common not just with current online shopping trends, but in the past during times of recession or even the great depression, going back to the 1920s and 1930s. I found one study that claims that nearly two-thirds of online shoppers send things back (http://www.bbc.com/news/business-36395719). This leads me to believe that most major retailers who participate in online shopping expect high rates of return; people cannot try on clothes until they arrive, thereby ordering multiple sizes and styles, fully intending on returning many of the items, even after trying it out at a party. Many of these shoppers argue that the companies shouldn’t advertise free returns and free deliveries if that business can’t support it. However, it is pointed out that this practice isn’t common only among online shoppers.
Retailers would discourage what Amy wants to do for several reasons. First, it is ethically grey at best. Second, consumer-friendly store policies are meant to help shoppers when there is an actual problem with clothes they bought, not to be taken advantage of. Furthermore, even if the item is in good enough condition to be put back on the shelf, a peak time or season may have passed in which the merchandise would have been bought by someone intending to keep it, but now the opportunity is lost. Additionally, the company loses money if sales associates used their time and energy to assist Amy with her purchases. Last, there are companies that allow you to rent clothes for one use, rather than buying them.
As mentioned above, one of the consequences is that the business may lose money; whether it be through manpower, time, or inventory that can’t be resold, regardless of what condition Amy thinks she’s returning the item in (for example retailers may conduct sniff tests to determine if they can resell inventory). I doubt Amy could do this enough to individually cause a retailer to fail, but as the study indicates, many shoppers have this attitude; together, they could all be contributing to a potential closing of a business. A potential consequence for Amy is that she gets a bad reputation to the point that her returns or even her business is refused.
The accounting for the return would be as follows:
Sales Returns and Allowances……….$X
Return of merchandise.
Clancy, O. (2016, May 30). Most online clothes shoppers send something back. Retrieved November 24, 2016, from http://www.bbc.com/news/business-36395719
Fottrell, Q. (2016, June 19). Is it wrong to buy and wear clothes that you plan to return? Retrieved November 24, 2016, from http://www.marketwatch.com/story/is-it-wrong-to-bu…
After reading this case study I believe that Amy Martin actions are unethical because she is deliberately purchasing merchandise that she has no intentions on keeping. I have worked in retail for several years and recognize this scam as return fraud. Return fraud is the act of deraduing a retail store via the return process. It is very sad how individuals come up with scams such as this one thinking they are getting over on companies but if they actually think about it they are actually hurting the company. This type of activity can cause companies to increase the merchandise they sell in order to accommodate for the loss due to fradulent activities or tougher return policies. Retailers also experience the use of bogus merchandise receipts. All a person needs is a high quality scanner and printer and it will allow them to be able to alter receipts, making it very easy for them to be able to return stolen goods. This is another scam that allows an individual to return an item so they can get cash for the shoplifted merchandise. If Amy knew ahead of time about these professional events she planned on attending she could have came up with other legal options in order to get a suit along with accessories. Amy could have located her necessitates from a second hand store and wore the same thing to each event. It seems that Amy is trying to prove to be someone that she is not. The only way that retail companies can stop this kind of scam is by charging restocking fees on abusers which can be tracked using a database. If a person is aware that they may not receive their full refund back then maybe they will stop this certain type of activity.
Since Amy purchased the suits on credit the company should account for the suits return as followed:
Sales Return and Allowances……………………$200.00
Merchande was able to be return to the company
Cost of Goods Sold………………………………………..$100.00