Generous returns policies are great, but many companies are sick and tired of the admin and fraudulent claims.
I’m a recovering serial returner. I admit it. When I lived in the UK most retail outlets had a very generous returns policy and I made use of that for my own ends – namely, to try on clothes in the comfort of my own home because I cannot stand chilly shop changing rooms. I came to learn the error of my ways when shopping with a friend in House of Fraser (RIP) one day.
She worked in retail and was horrified at my common practice. Up until then I hadn’t realised how much work goes into processing returns – or that with some smaller stores, they may even miss a sale while I’m cosseting away their only size 14 garment at home.
In May this year, online retail giant Amazon stated it would ban customers who habitually return goods, feeling that its generous returns policy was being deliberately abused. In the US, the National Retail Federation reports that 10 per cent of sales are returned – and 6.5 percent of those returns are fraudulent. That’s US$22.8bn worth of goods. Retailers reported some truly outlandish claims to Business Insider, like a 10-year-old plastic Christmas tree returned to Costco, and thousands of dollars of homewares returned to Target having been used for real estate staging.
In the wake of Amazon’s strong position on the matter, other retailers have taken similar action. Best Buy, Home Depot and Victoria’s Secret – all household names in the States – are tracking customer returns, while L.L.Bean has rolled back its lifetime guarantee on products to one year, citing abuse. There are even third party services, like Optoro, a start-up, helping companies to recoup lost money by selling on returned products via Ebay.
It would be easy to see this problem as isolated to faceless e-tailers or the largesse of the American retail sector, but it’s not. Research by Brightpearl in the UK published in September identified serial returners are costing retailers £7bn a year. They said 40 per cent of retailers had noticed an increase in returns in the last 12 months, with 52 per cent stating processing returns was impacting their profits.
More than half of 18 to 24 year olds in the UK intentionally return items they’ve purchased, and around 30 per cent of all online purchases are sent back.
In New Zealand there are no stats on this, but anecdotally it is an issue here too. One retail worker at a major chain, who did not want to be named, told me she had processed thousands of dollars of returned goods from just one customer in the space of a month. However, rather than bringing in sweeping policies tightening up returns for all, most Kiwi companies are choosing to deal with this by quietly addressing the issue with those customers.
“This is an issue, but by percentage of total orders, large retailers we work with have said this is minor,” says Chris Wilkinson from First Retail Group Ltd. “In the instances where it has been flagged as a concern, customer service staff have reached out to the customers personally to understand how the brand can do better – essentially recognising there is an issue, but owning that themselves. That saw a change in behavior without compromising goodwill.”
With customer service standards needing to be at an all-time high in order to draw people into bricks and mortar stores, taking a heavy-handed approach in our small and personalised economy probably isn’t a great idea. Optimising your systems to process returns faster and more effectively, finding ways to on-sale returned goods efficiently to reclaim lost dollars, and building a relationship with your customer are all ways to minimise the impact of illegitimate returns.