Return to Sender: The problem with banning serial returners

As more retailers consider banning serial product returners, some experts are warning that it could end up doing more harm than good. Laura Barnes looks at what other solutions are available.
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Despite its somewhat lax returns policy, back in May, retail giant Amazon made a bold move against “serial returners”. Those customers that had a habit of regularly returning goods found themselves banned from the website.

According to WSJ, accounts are being closed for activities that include “requesting too many refunds” or “sending back the wrong items or violating other rules”.

Skip ahead to October, and a new report from retail ERP platform Brightpearl revealed that 45% of retailers are planning to follow in Amazon’s footsteps and ban shoppers who deliberately and regularly buy multiple items with the intent to return some of them.

With over one-third of UK retailers saying that they’ve seen an uplift in serial returners over the last 12 months, many are feeling the strain. A quarter of retailers told Brightpearl that introducing lifetime bans for problem shoppers is “a necessary move to protect their slim margins”. In addition, one-third of UK retailers would impose bans to save time and administration resources – showing that chronic returns deliver many knock-on costs.

Of the brands Brightpearl spoke with, a whopping 67% of consumer electronics firms plan to implement similar measures to Amazon.

Returns cost approximately £60 billion in the UK yearly, according to KPMG, £20 billion of which is generated by items bought over the internet. In association with Onepoll, Brightpearl surveyed 4,000 online shoppers and 200 retail decision makers to examine the measures that retailers are taking to combat serial returners – and how consumers are reacting to them.

The worst offenders are shoppers aged 18-34, where over a third of respondents confessed to having intentionally bought more items than they intended to keep. However the research shows that most shoppers are broadly in favour of bans for serial returners, with 56% agreeing it’s a fair policy.

However, there are clear differences in attitudes depending on age groups, with 18-24s much more likely to be unconvinced. Overall, just 7% of respondents disagreed about banning serial returners, whilst one in ten said they would never shop with an online retailer who imposed bans for returning too many items.

Brightpearl outlines that part of the ongoing problem of serial returning lies in the fact that many retailers do not currently have the right technologies in place to identify repeat offenders, with 59% of respondents saying that they cannot identify – or do not know whether they can identify – who their serial returning customers are.

“In today’s consumer-led retail environment, intentional returning could spell disaster for retail business owners if they do not have visibility over regularly returning customers. Without this, retailers will struggle with the definition and consistent application of their returns strategies – and could face a resulting backlash from shoppers,” says Derek O’Carroll, CEO of Brightpearl.

OVERSTOCKED

While returns are clearly causing a headache for retailers, the solution may not lay within the banning of shoppers, but rather how returned stock could be utilised to regain some of that lost money, while still keeping consumers coming back for more.

Returns and overstock specialists B-Stock believes that retailers should “get ahead of the returns game”, especially in time for Christmas.

EMEA director Ben Whitaker says that European ecommerce platforms can expect to see a whopping 25-40% returns rate. Looking at the video games industry as one example, a total of 23.7 million physical video games were sold in the UK during 2017, according to GfK, meaning the potential for recouping that return rate remains high, points out Whitaker.

“As returns increase, so too does the industry’s need to adapt, protect itself and strategise to overcome this challenge,” says Whitaker. “Margin compression at the front end of retail and ecommerce also means fighting for a finite number of customers and both platforms seeking other ways to innovate. Returns could well be the answer to that gap.”

With more than 20% of consumer electronics purchases returned on a regular basis, Whitaker says retailers must look at this “sooner, rather than later”.

“What is key to remember here is the fact that the lifespan of some of these products are short initially, but there is added value in the reselling market.

“Video games such as the FIFA series as well as potential game of the year titles such as the recently-released PS4 exclusive Spiderman game generate high pricing both in-store and online, but also offer excellent rates of return to sell on,” he explains. “Popular titles can remain high-value in used condition for many years after.”

But it isn’t just video games that have this kind of potential, B-Stock suggests that the associated technology also offers lucrative reselling opportunities, with accessories such as earbuds, cases and batteries boasting some of the highest return rates and therefore making up a large percentage of products in the overstock and liquidated market.

“Retailers need to know that trade buyers who purchase this kind of stock want large quantities of inventory sorted by condition. That means that even if returns aren’t in the most perfect condition, there is still a vast number of buyers out there who demand this kind of product,” says Whitaker.

“We see this kind of demand even more when it comes to mobile phones, the iPhone X, despite being released almost a year ago, is still reaching more than 60% of its value in resales. That kind of value simply cannot be ignored.”

SMARTER SHOPPING

If retailers are going to go down the route of keeping (or even relaxing) their returns policy in a bid to make themselves look more inviting to shoppers put off by the threat of bans, another area that may help to make the whole process not only smoother but more economically efficient is how they display products.

“At a time when consumers are increasingly looking to purchase online, retailers and brands need to ensure their customers can not only find the products they’re looking for from a list of thousands but also ensure they have an enjoyable experience in the process,” says Angel Maldonado, founder of EmpathyBroker.

The ecommerce search and discovery company recently launched two new products to help retailers enhance and improve their online customer experience, while also going a step further in terms of the automatisation and accuracy of their product catalogues.

‘Imaginize’ uses the latest in-house image recognition technology to identify and recognise products using both their colour and their form. This allows items to then be automatically classified and tagged, saving retailers time and effort while improving accuracy and findability (the metrics used to recognise how easily and quickly customers are able to find what they’re looking for).

The product has been developed to meet the growing needs of, and demands facing, the online retail industry. “It’s based on years of experience working with retailers analysing and understanding how users interact with catalogues, how they look for different types of clothing and the queries they use to define and label products,” says EmpathyBroker.

In addition to this, the new ‘EmpathyContext’ product provides retailers with “greater personalisation through understanding a user’s context and intent” in a bid to provide them with query results that align to their individual needs.

The technology analyses information gathered from each consented query, click and purchase, which is then collected, processed and transformed into insightful consumer behaviour data. The company says these insights generate highly relevant, unique and contextualised results while also creating dynamic and intuitive digital experiences.

“We’re continually looking to innovate and support our retail customers and Imaginize and EmpathyContext have been developed to do just that by improving efficiency and accuracy while enhancing the customer experience to make it an exciting, fruitful and joyful one,” concludes Maldonado.

While Amazon is usually seen as the leader of the pack when it comes to online shopping, there are very few other retailers that have the kind of household name – or sheer volume of customers, for that matter – to be able to confidently apply such a ban without the fear that they will do more harm than good.

Those that do want to drive ahead with clearing out the serial returners from their business need to make sure they implement the correct software to ensure they are heading down the right path. 

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