When someone refers to something as the cost of doing business these days, they generally refer to something that sounds out of line or unfair. It’s an indictment of how we view business in general that this has become a turn of phrase that can be used in everyday life. We recognize that business, no matter what kind of business it may be, is going to cost you. How much it costs can be surprising.
10. Item Returns Cost US Retailers Over $816 Billion
When was the last time you returned something to a store? Maybe it was broken, food that had gone bad, or something you just didn’t like once you got it home and looked at it. Have you ever considered what that means to the business that accepts the return? Most of us don’t, but the cost of retail returns to businesses is an almost baffling $816 billion per year. That works out to more than what the US government spends on education training and employment programs in a year.
In many cases, there are multiple levels to how a return item costs a company money. For instance, if you return your Amazon order, Amazon pays the postage to take it back. A number of things can’t be restocked and sold to somebody else for various safety reasons. Other items are so inconvenient to restock that they’ll throw them out instead.
About 16.5% of all retail sales are returned by consumers. Holiday returns alone account for $171 billion in losses. Fraudulent returns make up around $84 billion in yearly losses.
9. The Original Xbox Cost Microsoft $4 to $7 billion
The console gaming market was worth $37.9 billion in 2022, and it’s only expected to grow year over year. The market would be nowhere near as big as it is without the Xbox versus PlayStation battle that has fueled for decades now.
Microsoft’s decision to join the console Wars and create the Xbox looked completely foolish when it started back in 2001, but it began to make a lot more sense. This is all because Microsoft lost between $4 billion and $7 billion on the original Xbox.
Microsoft worked quickly to push out the original Xbox. It wasn’t designed to be cost-effective or efficient; they just wanted it done as soon as possible. Every piece of hardware they sold was a loss for the company. The idea was that they could make up money later on the software, which is clearly what they did as the Xbox gave way to the 360 and later generations that have all been huge money-makers.
8. Friday the 13th Costs Businesses Hundreds of Millions
Paraskevidekatriaphobia is possibly the most costly fear for business in America. The fear of Friday the 13th may sound silly, but when you get to the bottom line, it’s no joke. People take this so seriously that it has a multi-million dollar impact on the economy every single time the 13th falls on a Friday.
An estimated $700 million to $800 million in productivity or revenue is lost every Friday the 13th due to people refusing to go to work or shopping. One survey in Britain showed that one in 20 people won’t leave their house on the unlucky day.
Considering that there could be up to three Fridays the 13th on the calendar in any given year, the potential business loss could be over $2 billion in total.
7. CVS Lost $2 Billion in Annual Sales by Dropping Cigarettes
For many years doctors would endorse the smoking of cigarettes. TV commercials would feature someone in a nice white coat smoking their Marlboro and explaining how it helped relax you and take you to flavor country, or whatever the medical reason might be for smoking a cigarette in the 1950s. Later, this advertising method was dropped, but cigarettes were still not far removed from the world of healthcare. For decades you could buy cigarettes at a drugstore.
CVS drug stores stopped selling tobacco products in 2014. Remarkably, this did a great service to the world at large. 38% of CVS customers who were smokers stopped smoking altogether rather than inconveniencing themselves by going to another store to buy cigarettes.
On the financial side, the company took a massive hit of around $2 billion by dropping tobacco. Their overall sales were $139 billion at the time, but a $2 billion loss is nothing to sneeze at.
6. Sunny Delight Saw Its Sales Cut in Half by a Scandal
Sunny Delight was a childhood staple for many people of a certain age. It wasn’t exactly orange juice, but it was orange. That has to count for something. It became a huge hit when it made its way to the United Kingdom. Sunny Delight was the third best-selling soft drink in the UK in the ’90s, right after Coke and Pepsi. It was also the 12th best-selling grocery product of any kind in the country. However, that didn’t last long.
Though it sounds like an urban legend, there was a story in 1999 about a 4-year-old girl who drank so much Sunny Delight she turned yellow. This was true because of the amount of beta carotene added to Sunny Delight to give it the bright yellow color it was famous for. Although it was harmless, it faded soon after, and the girl had to drink 1.5 liters a day to achieve it; once the story hit the news, the damage was done.
Sales of the beverage were cut in half in the aftermath of the yellow girl scandal. This led the company to attempt rebranding in 2003, then a reformulation in 2009, and another tweak in 2010. Sales never fully recovered.
5. The Movie Sideways Cost Merlot Wine Makers $400 Million
Sideways was a 2004 comedy-drama about a trip through wine country. It was nominated for several Academy Awards and was generally well-liked by audiences. Most audiences, at least. But probably not the people who make Merlot wine.
The lead character in the film is something of a wine snob. At one point, he angrily exclaims that he has no intention of drinking merlot and insults the wine. You’d think a character in a movie doing that wouldn’t be a big deal, but you’d be wrong. This had a devastating effect on the real-world Merlot market.
Sales of Merlot began to tank immediately after the film was released. Ten years on, the estimated loss was $400 million. Farmers lost about 7,650 acres of merlot grapes in favor of something else, in many cases pinot noir, which saw a huge boost after the film.
4. Tropicana Lost 20% of Their Sales After a Package Redesign
Have you ever wondered how important branding is for a product? Tropicana can tell you. In 2009, Tropicana decided to redesign its orange juice cartons. The juice stayed the same, all they did was change the package, which backfired miserably.
For whatever reason, Tropicana felt the old look, which was just an orange with a straw in it under the product name, was not good enough. They spent $35 million on a rebranding campaign complete with a new design that was a close-up image of half a glass of juice. Not very complex stuff, right?
The company had about $700 million in annual sales before the redesign. Sales dropped by 20% after customers began to criticize the new look. That worked out to around $30 million on top of the $35 million they spent on the campaign in the first place.
The failure was blamed, at least in part, on Tropicana losing its connection with its customer base. Their old logo, which they went back to, was famous and iconic. It also has some personality. But they switched it to an incredibly generic redesign with little appeal, and customers rejected it very strongly.
3. Halo 3 Was Blamed for a 27% Drop in Box Office Returns
The box office success of movies is something that people find endlessly fascinating. Whether or movie does incredibly well or incredibly poorly, you can count on a hundred articles about it on entertainment websites for weeks to come. What’s far less common is when you find an outside reason for a drop in box office for all movies. But that happened in 2007 with the release of Halo 3.
Box office returns had plummeted 27% in October 2007 following Halo 3’s release, and it was the only thing analysts could think to blame for the massive slump. It was the worst October since 1999.
Analysts are often wrong, so you can take this all with a grain of salt, but the numbers were still awful. The Heartbreak Kid, a movie that reunited Ben Stiller with There’s Something About Mary directors the Farrelly Brothers, was expected to make as much as $25 million on its opening weekend. Instead, it took in $14 million.
The link to Halo was established with Xbox Live numbers. 2.7 million people played the game in its first week, more than a third of everyone who was an Xbox Live member at the time. The game logged 40 million hours of play in its first week. Both Halo 3 and The Heartbreak Kid were looking to appeal to the same 18-34 demographic. Still, Master Chief seemed to win the battle handily.
2. SC Johnson Lost a Huge Market Share by Changing Saran Wrap
Sometimes doing the right thing is a one-way trip to financial loss, something SC Johnson learned when they removed a dangerous chemical from Saran Wrap. Saran Warp famously contained something called polyvinylidene chloride. This compound was chiefly responsible for the cling quality of the plastic wrap that allowed it to stretch and stick over bowls ad plates to keep all your leftovers fresh.
It was actually news when the formula changed because people complained that their Saran Wrap didn’t cling like it used to. Clinging was the only thing people wanted Saran Wrap to do, so if it failed at that, it was a waste of money. The problem was that PDVC is very toxic and carcinogenic.
SC Johnson dropped the chemical from the formulation, and their control of the market dropped from 18% to 11%,
1. Beavis and Butthead Destroyed Album Sales for the Band Winger
Beavis and Butthead started as a short cartoon before they got their own series on MTV in 1993. While the show mostly focused on Beavis and Butthead themselves, there were a couple of supporting characters who became memorable. One of these characters is Stewart, a nerdy kid from the neighborhood that Beavis and Butthead often mock. Like the two main characters, Stewart is always seen wearing a band shirt. That band was Winger. Winger believes Beavis and Butthead ruined their careers.
Winger guitarist Reb Beach once said the band had just released what he considered to be their best album. They were on tour to promote it when someone showed them an episode of Beavis and Butthead where they hung up Stewart by his underwear. They go to Stewart’s house, and all of his family, even the dog, are losers. And they’re all wearing Winger shirts.
The band’s tour sank immediately. People stopped buying tickets, and album sales went into the toilet. Radio stations stopped playing the band’s latest single because they were embarrassed. One stupid cartoon ruined them, costing Reb an expected $200,000 publishing advance.
In 2011, Kip Winger made amends with Beavis and Butthead creator Mike Judge and admitted the show had hurt them a lot, but they had buried the hatchet and moved on.