Are Serial ‘Wear & Return’ Customers Denting Your Profitability?

Are Serial ‘Wear & Return’ Customers Denting Your Profitability?

Online fashion retailer and third-party marketplace ASOS has been in the news for changing its returns policy and saying that it will consider suspending the shopping accounts of ‘wear and return serial returners’ if they detect an “unusual pattern” of sending back their purchases.

Explaining what sort of behaviour might warrant a ban, the company said in an email to shoppers that if “we suspect someone is actually wearing their purchases and then returning them or ordering and returning loads – way, waaay more than even the most loyal ASOS customer would order – then we might have to deactivate the account.”

The practice of clamping down on this activity is not uncommon amongst retailers but most don’t talk about it openly. In this case, even should a customer buy three pairs of trousers and return two because they don’t fit and perhaps even do that often, it isn’t a problem. Sending back worn and soiled garments would sound the alarm bells though.

Returns are on the rise online

It’s too simplistic to simply say that ‘distance’ purchases will naturally have a returns rate higher than goods bought in a shop, even if it is perfectly true. When you look at the rates of returns online versus those that happen in-store, a more complex picture emerges.

Online shopping returns, have increased substantially from 9% in 2014 to 14% in 2017. And all indications are that they will continue to grow in number.

Yes, internet shopping does attract more returns because people can’t experience what they are buying until they arrive. But the returns rate for online shopping is growing whilst returns on the high street remain static.

As recent research from WorldPay shows, the returns rate for in-person shopping in the clothing and footwear sectors has remained stable over the past five years to 2018 at around 7% or 8%. Online shopping returns, have increased substantially from 9% in 2014 to 14% in 2017. And all indications are that they will continue to grow in number.

Should other retailers also consider implementing a ‘returns blacklist’?

If you make the bulk of your sales via online marketplaces such as Amazon or eBay then they should be making the decisions about repeat returns offenders themselves, behind the scenes. The marketplaces also have in place systems to detect the serial returners across multiple merchants to build a full picture.

Indeed, Amazon has already gone public and says that “there are rare occasions where someone abuses our service over an extended period of time. We take action when appropriate.” Amazon has provided little in the way of how they will judge who needs to be banned but you can be certain (as with everything the ecommerce giant does) that it will be based on sound data-analysis.

Every retail business should keep a close eye on matters regarding returns in their business. And that means having effective tracking and reporting in place. At ZigZag we are often surprised by the number of retailers who don’t have a handle on the level of returns they experience, let alone have such vital information readily to hand that they might have a serious problem that is denting profitability.

Whether or not you should also implement a returns blacklist will depend on your analysis, your retail vertical and what you are willing to tolerate. But any decision must be informed by data. You don’t want to ban good, loyal and high spending shoppers just because they send a few more returns than average.

One thing to consider as you analyse your returns is to see if there are certain SKUs or areas that are attracting a higher number of unusual returns and, if so, you can take steps. You might even judge that it’s worth not selling some problem products at all.

Are you grading and assessing your returns?

Returns are an inevitable aspect of online retailing but the number of returns you experience is just one part of the story. To fully understand whether you have problem with serial returners, you’ll need to assess why products are coming back. Some returns are unavoidable and are part of the retail landscape but others represent bad consumer practice.

If items come back in resellable, labelled condition you can just restock them and sell again. But as you consider if there is a ‘wear and return problem’, you’ll also be receiving items that are clearly worn, used or damaged. Keeping tabs on this kind of return is vital.

Review the message that your returns policy is sending shoppers

Ongoing assessment of your returns performance will also help you consider ways that you can minimise returns in the first place. The best place to start is with the information provided on your product listings.

76% of British shoppers say they check the returns policy before they click the buy button (or not) when shopping online.

Don’t forget that, for starters, your customers have basic legal rights for returns under distance selling and other consumer legislation. But you have the opportunity to hone a policy that speaks about your business and brand values that goes beyond the legal minimums.

Royal Mail research from 2018 reports that 76% of British shoppers say they check the returns policy before they click the buy button (or not) when shopping online. So it is an important space where you can communicate with your shoppers.

Your returns policy should send out a message loud and clear to consumers: “Play fair if you want to keep shopping with us.” It seems likely that the number of shoppers who will actually be suspended will be remarkably small compared the total base of online shoppers.

If you think that your retail business is unduly affected by rogue returners, your policy as displayed online is the most important place to communicate with shoppers and a timely review of your returns policy should have a beneficial impact on your bottom line.