According to the NRF’s 2018 Consumer Returns in the Retail Industry report, total merchandise returns account for nearly $369 billion in lost sales for US retailers.
Naturally, retailers expect returned items as a cost of doing business, but excessive returns are becoming more and more problematic. In fact, a recent report discovered that more than 40% of retailers say “intentional returns” have increased in the past year.
At least 44% of retailers say profit margins are being strongly impacted by the handling and packaging of returns, and 70% say these conditions will worsen as the practice intensifies.
Thwarting Serial Returns
There’s no bulletproof way to prevent returns (although retail giants like Amazon plan to test that theory with a lifetime ban of customers who habitually return items). However, making sure you have solid policies and procedures in place will cut down on the likelihood of them happening.
For starters, always have your return policy clearly posted in the store (and/or online). You might even consider printing your return policy on your purchase receipts.
Read on for 4 more ways to reduce potential serial returns:
1) Let Customers Try BEFORE They Buy
According to a report by Knowledge Networks PDI, a survey of 1,800 respondents discovered that 58% would buy a product after trying it.
Brick and mortar stores can provide shoppers with samples, live demonstrations and try before you buy product stations that increase consumer confidence in the items they’re considering.
Ulta, for example, allows customers to handle and switch on blowdryers before buying, letting them experience merchandise through touch and feel. This helps shoppers make more informed decisions, which also helps to minimize returns.
Warby Parker is a great example of a company using the try before you buy model. Using online tools, quizzes, and phone calls with stylists, they help customers choose 5 sample glasses they can try on at home for five days. Once the customer decides on the pair they like, they simply order it online to receive a fresh new pair. Meanwhile, they send the samples back using a prepaid return label.
Try before you buy provides online shoppers with the opportunity to experience items before buying—like they would in a brick and mortar store. This option also helps to cut down online returns, as well as reduce dissatisfaction with return policies.
2) Make Sure Product Descriptions Are Clear
If you’re selling online, it’s imperative that your photography is crisp and clean and that product descriptions are accurate and detailed. The clearer the photos and descriptions, the less likelihood there is for miscommunication, confusion, and returns.
It’s also a good idea to have shoppers submit photos of themselves using your product. This way, people can get a better idea of what your item will look like when used by real consumers, thus increasing their confidence in their purchase.
Take a look, for example, at what the customer wrote about this product. She’s included some great information about the fit of the dress, including her own height and weight and the size she ordered, so a customer with similar characteristics would be able to make a more informed decision before purchasing it.
3) Use Online Fitting Tools
Antony Karabus, chief executive officer of HRC Advisory, believes that excessive returns are “largely due to fit issues”, with customers buying multiple sizes and colors then returning those they don’t want.
One way to prevent this practice is by providing tools to help shoppers select the right size the first time around, so they don’t have to add additional purchases in different sizes to ensure a proper fit.
The Zara site is equipped with a fitting assistant to help shoppers find the best size for their body type. The tool allows people to enter in their own height and weight and their preference for a snug, perfect, or loose fit.
The “What’s My Size?” fitting tool then informs shoppers what customers who fall into similar size categories purchased, by percentage. After entering personal size information once, the website saves it and automatically applies it to other product pages.
Don’t make customers wonder whether they’re buying the right size, or not. Give them as much information as possible to get the right fit from the start. You might just eliminate excessive purchases that could just end up coming back to you.
4) Get Customer Feedback
Just as you would seek customer feedback on your products and services, it’s also a good idea to find out what customers think of your return policy.
Asking customers to provide feedback on the products they return, and their reasons for doing so, not only helps other shoppers make more informed choices, but it provides you with insights that can be used to improve descriptions and refine future product specs.
Inviting customers to give you candid feedback and observations about the products they’re returning also helps you better understand what your customers want.
Tips For Handling In-Store Returns
One of the biggest problems with returns today is that many young shoppers—the worst offenders are between the ages of 18-34—purchase items for the sole purpose of photographing themselves for their social media accounts, and returns seem like a logical way to try out items before they decide to keep them.
These shoppers aren’t too happy about possible bans and stricter policies that could affect their return habits, and many of them say they’d stop shopping with a retailer that tried to enforce stringent penalties.
Despite the headache and frustration caused by returns, retailers should try to focus instead on potential opportunities that not only thrill shoppers, but also aim to thwart serial returns and possible fraud. Here are a few things to consider when handling in-store returns:
View Returns as Conversion Opportunities
When someone returns a piece of clothing because they don’t like the style, make a friendly suggestion that they browse your new arrivals and use the return as an opportunity to up-sell other items. For customers wanting to exchange a product, ask if they’d like to add some other items to their order, and offer a discount if they transact the purchase on the spot.
Since you’re recording the purchase in your POS system, you should have a record of the return, plus the additional sale, which can help you track multiple returns from one customer.
Bolster the Return Transaction
Decide the condition that returned items must be received and charge a 5-25% restocking fee for opened items—except in the case of defective items or where prohibited by law.
Be selective about the products this fee will be applied to—for example, electronics used for seasonal events or fashion items worn to high-end functions.
Leave a Breadcrumb Trail
Make receipts mandatory for cash returns, and refund money in the same form of currency used for the purchase. If the customer purchased the item with a credit card, only issue a credit to that same card.
Was the item purchased with a personal check? Issue a refund by mail 14 days from the receipt of the returned merchandise, leaving enough time for the original check to clear the bank. Want to eliminate or limit cash refunds altogether? Consider offering store credits or equal exchanges.
Make a habit of requiring identification when accepting returns. Then use your computer database to track returns by the customer and make note of excessive or fraudulent returns.
“The concern around rising returns is the chief complaint we hear from retailers,” says Jessica Murphy, co-founder and chief customer officer of True Fit, a data-driven personalization platform for helping to predict clothing size and fit.
Backed by True Fit’s data, however, “The impact of ‘serial returners’ is not all bad—since many of these ‘serial returns’ are by the most profitable customers with net sales of 3.6 times higher than that of the average shopper.”
In most cases, serial returners are serial spenders, so be wary of cutting off the wrong customers. Be judicious in the changes you make to return policies as they can create friction for consumers, and result in customers not buying at all.
There will always be some customers who try and scam the system with fraudulent returns, and as a retailer, only you know if banning serial returners is the right move for your business.
It’s your responsibility to periodically evaluate and optimize your return policy. Learning as much as you possibly can about your processes for returns and exchanges will give you the knowledge and insight to make the decisions that are best for your business.
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