You likely have heard of the Galaxy Note recall by now. The skinny is that Samsung, in a rush to market to beat the iPhone launch, accelerated the release of the Galaxy Note and Galaxy S by a month. Bottom line results were good, with Samsung having the best June quarter in two years. But, many experts are saying that the supply chain could not handle the additional strain, and safety ultimately took a back seat to profits. Whether or not that is true, there is no arguing that there is an active recall of Galaxy 7 phones in 10 markets, which includes the U.S., due to batteries that have caught fire while recharging.
“Samsung might have over-exerted itself trying to pre-empt Apple, since everybody knows the iPhones launch in September,” Chang Sea-Jin, business professor at Korea Advanced Institute of Science and Technology and author of “Sony vs. Samsung,” told Fortune. “It’s an unfortunate event; it feels like Samsung rushed a bit, and it’s possible that this led to suppliers also being hurried.”
The scale of the unprecedented recall, which some analysts forecast will cost Samsung nearly $5 billion in revenue this year, follows a separate supply-chain management issue that led to disappointing sales of the Galaxy S6 series last year.
We have talked in this space frequently about recalls, and the fact that it is not an “if there will be a recall” but more of a “you likely will have to deal with one” issue. Even the most well-intentioned supplier of promotional products will, at some point, probably need to execute a recall. The very nature of the way promotional products are sourced today makes keeping a 100 percent transparent supply chain nearly impossible. As a result, it is much better – and safer – for distributors to make sure suppliers have successfully conducted a mock recall before they actually need to count on them when they really are required to.
We have also talked about product failure and the damage that is associated with it – legal, brand value, public relations, and brand affinity. But, will this large recall really harm the Samsung brand with consumers in the phone market? Not according to Sprint CEO Marcelo Claure.
“We’re going to pick them up and six months from now nobody will remember that there was a Note 7 recall.” Sprint also told Android Central that customers will be given a “similar device” to use, as getting a replacement device may take a few weeks.
“Stuff like this happens,” the Sprint CEO added. “It has always happened. The world that we live in today just exposes it a thousand times more (with) the Internet, social media, and all that. But having issues with phones has been happening for quite a long time.”
The challenge has been getting Sprint customers who bought a Note 7 to bring them back, the CEO said. “Consumers have a way of going about their business,” he says. “They look at one in a million explodes or 10 in a million explodes.”
How about you – have you gauged the risk in your own mind before you returned a recalled product? Did you think the effort was more than it was worth and simply discarded the item? Since most promotional products are given away, do you think that your end-user clients are less concerned than if they were selling them?
Jeff Jacobs has been an expert in building brands and brand stewardship for more than 35 years, working in commercial television, Hollywood film and home video, publishing, and promotional brand merchandise. He’s a staunch advocate of consumer product safety and has a deep passion and belief regarding the issues surrounding compliance and corporate social responsibility. He recently retired as executive director of Quality Certification Alliance, the only non-profit dedicated to helping suppliers provide safe and compliant promotional products. Before that, he was director of brand merchandise for Michelin. As a recovering end-user client, he can’t help but continue to consult Fortune 500 consumer brands on promo product safety when asked. You can also find him working as a volunteer Guardian ad Litem, traveling the world with his lovely wife, or enjoying a cigar at his favorite local cigar shop. Follow Jeff on Twitter, or reach out to him at jacobs.jeffreyp@gmail.com.