The Downside of Free Returns and Exchanges: Tackling the Growing Number of “Serial Returners”

customer-returns

A new survey from Brightpearl found that 42 percent of U.S. retailers say they have seen an increase in the number of “serial returners” over the last 12 months. What’s more, 61 percent of the retailers surveyed said they would ban serial returners. This is an interesting change in an industry that has put so much emphasis on facilitating free returns and exchanges.

Returns go beyond convenience and tap into shopper psychology relating to customer care and value. When online retailers go the extra mile to provide easy return options, they’re making a marketing statement, hoping that customers will be instantly drawn to purchase more. After all, brands are building trust and customers need to feel secure that if they’re not satisfied with their online purchase, then at least the return experience will be as enjoyable and seamless as the shopping experience itself.

The issues and challenges for retailers begin when certain customers abuse their flexible return policies. Earlier this year, Amazon came under fire for banning some users from their site for abusing their returns policy. While they didn’t specify the threshold of returns that would trigger them to enforce the ban, the retail giant emphasized that these instances are rare. In a statement, a spokesperson for the company said: “We want everyone to be able to use Amazon, but there are rare occasions where someone abuses our service over an extended period of time. We never take these decisions lightly, but with over 300 million customers around the world, we take action when appropriate to protect the experience for all our customers.”

Buying clothes for an occasion, tucking in the tags, and returning them to the store the next day has been the strategy of thrifty shoppers for many years. Today, people are doing it just to look fresh and on trend – ready for that perfect instagram photo. According to a survey commissioned earlier this year by Barclaycard, nearly one in 10 UK shoppers admit to buying clothing only to take a photo on social media. After the “outfit of the day” makes it online, they return it back to the store. The question is, what are the implications of retailers? Who will cover the cost of all those deliveries and returns for items that aren’t sold? Is the ‘social buzz’ or positive ‘word of mouth’ enough to cover the hefty costs required to handle so many returns?

As the entire industry moves towards providing customer-centric delivery services, the challenge could be far reaching – and some retailers might have to rethink their return policies, putting boundaries in place to deal with customers that abuse their existing policies. It’s not just Amazon that is struggling to manage billions of dollars in losses due to scams and misuse related to customer returns. Many big box retailers such as Best Buy, go so far as to hire companies that track customers’ return behavior in order to minimize their loses.

Retailers, and particularly those in verticals such as fashion, understand that the bedroom is the new fitting room. It is becoming increasingly common among shoppers to order products in multiple sizes or colors knowing that they can try everything, keep what they like, and return the rest. While many retailers will embrace this trend, they need to be cautious about those customers that abuse the system and don’t buy. The challenge moving forward is to be careful when assessing the terms around their returns policies, without damaging an exceptional shopping experience which in most cases will lead to increased loyalty and sales.

 

 

Lior Sion