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Will cracking down on serial returners solve retailers’ return problem?
A university study concludes targeting serial returners is the smarter path to reducing return costs because targeting regular shoppers with stricter return policies will likely backfire.
In one experiment, the researchers led by Iowa State University asked over 460 participants to imagine they were loyal customers of a retailer and planned to return a recent online purchase. Half were told the retailer was shortening its return window for all customers (generalized policy) while the rest were told the change would only affect serial returners (targeted policy).
Participants were found to be significantly more likely to speak negatively about the retailer when the policy change was generalized. Further, negative word of mouth was significantly related to intentions to switch to a different retailer.
In another survey, 100 participants were asked their thoughts on generalized versus targeted policy changes. When the return policy change was targeted (aimed at serial returners), 44 percent expressed positive emotions, 13 percent negative emotions, and 43 percent, neutral. Positive respondents often referred to the fairness of the updated policy.
Robert Overstreet, a supply chain management professor at Iowa State, said in a press release, “Respondents largely understood that cheaters were increasing the price paid by everyone.”
When the return policy change was generalized, 64 percent of participants expressed negative emotions, only two percent were positive and 34 percent neutral. Nearly half of the participants indicated they would speak negatively about the change to family and friends (45 percent) and shop at another store (42 percent).
Despite some positive word-of-mouth from instituting a policy aimed at serial returners, both surveys showed low-intensity communication for a targeted policy change (website update or store signage rather than PR/social media push) led to the best outcome.
Retailers are tightening their return policies (e.g., shortening return windows, charging return shipping fees) amid higher labor, shipping and storage expenses. According to Pitney Bowes’ BOXpoll survey from earlier this year, online returns cost retailers an average of 21 percent of order value.
Narvar’s “2022 Returns Benchmark Report” found 63 percent of shoppers surveyed admitted to bracketing (purchasing multiple variations of an item), up from 55 percent in 2019. A growing number of shoppers (15 percent) say bracketing is “just how they shop now.”
Targeting serial returners to stem a growing problem for retailers – Iowa State University
Is it time to shut down the free returns party? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Does it make more sense to crack down on serial returners than tighten restrictions on general consumers? Will better policing serial returners put enough of a dent into reducing the cost of returns?
Poll
Loading …BrainTrust
I am not surprised at all by the survey results. Targeted return policies are really not all that different than targeted offers and promotions: personalized approaches are always the most effective. As with so many things, I would prefer not to punish the many because of the actions of a few.
Yes, it makes sense to crack down on serial returners and tighten returns in general. The fact is returns are an endemic profit killer in the industry. And while providing a great customer experience and minimizing risk to shoppers of buying online is important, there’s a significant cost of doing so without some way to regulate it. It has to make financial sense for the retailer and be fair to the consumer. Tightening of returns policies on serial returns will help mitigate the impact, even though it will alienate some customers.
The returns problem is multifaceted. Tracking serial returners and thwarting their abuse is but one of three to five other tactics to reduce, if not solve, the returns problem.
I’m not sure I believe these polls 100 percent. How many serial returners are openly self confessing and acknowledging their behavior? And then basically voting against themselves in this kind of study? I think general customers will embrace reasonable fees and time windows. And for serial returners, it’s three (six…nine?) strikes and you’re out.
Exactly what I logged in to say. Those numbers sound light. Welcome to the world of DTC where returns replace the fitting room. This has been going on forever, since the catalog days.
Can retailers make it go away? I suspect the company with the easiest returns policy wins. There isn’t much loyalty anymore, so be careful what you wish for.
Bracketing is possibly the number one reason for clothing returns. Shoppers still have trouble guessing the best size for them. Pair that with making returns painless and, abracadabra, you’ve got astronomical return rates. But shutting off serial returners is not necessarily the answer for clothing. The solution is to provide a way for getting the right fit — for whatever body type — to reduce the “need” for bracketing.
I believe in a multi-discipline approach to the returns challenge. Online returns for clothing brands are frequently over 30 percent, which I believe is directly related to sizing issues. We need a better way to address the problem. One way we are addressing this is via AI and user-generated content (UGC). Another solution may be RFID using serialized inventory, and drop-and-go returns to speed the process and lower the cost.
It seems reasonable that those causing the biggest problem (i.e. serial returners) should be the ones to pay the price. Online retailers can easily detect return rates although putting in place mechanisms to deal with the problem is trickier. However, some caution also needs to be exercised — perhaps a high spender returns a lot because sizing is always off or because photos on the site don’t reflect the product. In other words, retailers need to understand the root cause of the issue rather than just punishing consumers.
A liberal return policy is designed to drive sales, not because you just want to give back money. Creating a return policy based on serial returners who abuse it isn’t the path to follow. Target and eliminate them from the decision on your return policy. Chasing away good customers is never a good business decision.
Hmmm? What percent of returns come from serial returners? Give me that number first. Then I will react appropriately.
In the meantime, online merchants should pay more attention to the actions they can take to reduce returns. How often do we get an item that was described one way and, when it arrived, did not meet the description?
Zappos encourages returns. How did they work this out?
Changing consumer behavior is tough in the best of times. When e-commerce was new, a generous returns policy was helpful to entice consumers to buy something based solely on a digital image, but it has effectively trained shoppers to spend less time on assessing products bought online. Now that the precedent of free or easy returns has been set it will be hard to pull it back. It’s inevitable that shoppers who relied on liberal returns policies will be resentful but some tough love is needed to maintain a sustainable e-commerce service.
Behavioral science tells us that a focused policy to deter habitual returners is best. People will respond positively to making those serial returners pay. Even the serial returners will likely applaud as they likely self-rationalize their behavior and don’t see themselves as doing something bad. Whether this puts a dent in the problem remains to be seen.
Retailers have the data to pinpoint their costliest customers. They should use it to minimize returns.
Targeting serial returners is just a start. Adopting AR and virtual fitting rooms can further reduce returns as online shoppers see exactly what they’re getting.
It’s hard for me to fully evaluate this without more knowledge about these serial returners. I have a suspicion that most might also be heavy purchasers at that retailer. Do you want to send your heaviest buyers elsewhere because they also make a lot of returns?
The survey results seem reasonable, but retailers must do a better job of helping shoppers on the front end of the purchase with more detailed sizing information. I’ve always liked information such as, “the model wearing the pants is 6’3″ tall,” “our shirts tend to run on the larger size,” “our shoes are typically narrower than the average shoe you purchase.” These hints help zero in on the right size and reduce the overall returns that occur.
The survey appears to give us the answer: crack down on chronic returners. However I’d be careful. Surveying 850 is a good number, but what was the breakdown of those surveyed? Before making any changes I’d survey more, make sure I hit all generations, and also look at the type of retail.
Finally, I can’t help but share what I’ve commented on several times in the past. A decision to change a return policy at this level is an example of punishing almost all of your customers for the sins of a few.
Returning products is a service that retailers offer to help build customer trust. From the customer experience perspective, it might be the most important service they can offer. To punish their entire customer base is an example of a “pennywise, dollar poor” strategy. They should focus on the few abusing these services and not risk alienating the majority of their customers to achieve a short-term gain.
I think this is more treating a symptom than the problem. More insight is likely needed into why that group of individuals are serial returners. Are there more tools that can help that customer rather than isolating them?
I agree that to punish all for the behavior of a few does not seem like the right approach. To paraphrase an old saying, “if you abuse, you lose.” In this case the customer loses some of the amount of time to return purchases.
A targeted return policy makes more sense than a general policy – target those who are abusing the system.
On the face of it this sounds logical, but what is a cheater?
I overbuy materials for home repair because it’s hard to know exactly what’s needed before digging into a project. I then return the unused materials (I did it a couple of days ago). My intention at the moment of purchase is that I will make returns, so am I a cheater? A serial returner? Home Depot has benefited from many more sales from me because they are liberal with their returns. Compare that to Best Buy who maybe 12-15 years ago wanted my driver’s license when I went to return a $15 item purchased less than a week before. I’ve never shopped them again.
As we’ve discussed here many times, it’s hard to find balance on this issue, but these broad labels and university studies are not the answer.
I am with you. Returns are not a problem that should be tackled uniquely. It is intricately connected to sales. It is foolish to measure returns without measuring the purchases a “serial returner” makes.
I too bristled at the broad brush strokes. Apparently, then I am a “cheater” because I return 10% of my items to Costco. Yet I spend 10x to 100x more because there are no hassles. And, I willfully brag about the Costco brand and products to everyone around me, something a university research paper won’t capture. And so how to determine — measure — which customers are cheats?
Retailers turned (some) consumers from being online buyers into online shoppers. Liberal return policies invited customers to try three, buy one or maybe none. I think the software is going to have to do more than measure return frequency or raw percentages and look at baskets as well before conclusions can be reached. If someone is buying two sizes and keeping only one, (and returning the other within a few days) do you really want to cut them off?
Identifying and cracking down on serial returners is one relatively easy way to address this pressing problem. It’s often done in stores i.e.: number of returns without receipt.
What happens when “serial returners” also turn out to be the retailer’s best customers? A lack of size standardization in apparel, for example, is largely to blame for bracketing and returns. The fix is needed on the manufacturer and retailer ends.
Prosecute the guilty and leave the masses alone … sounds like a strong, well informed strategy to me. It may not completely alleviate the issue, however, it would make enough of a difference to have a material impact on reducing the cost of returns — although I am staking my position on not seeing any analytics on this-it feels like the right path though!
For every process there is always people that is going to abuse it. As long as you state up front what the limits are, most customers are okay with that. Sometimes you have to fire your abusive customers to control the issue.
Why not both? While I wouldn’t be surprised if there’s some variant of the 80/20 rule in returns, there’s no reason to ignore the rest. And how do we compare a person who buys $10K and returns $1000 with one who buys only $20, but returns all of it ?
If crack downs on serial returners include revenue generating personal stylists who purchase a wide variety of clothing for clients to try on, and shoppers who buy multiple sizes to determine best fit, then retailers and DTC are taking a risk.
Retailers and DTC own the customer experience, and must solve personal sizing and fit issues with technology to increase the likelihood of making happy long-term customers. Crackdowns look enticing to the bottom line, but make it difficult to do business.
Recall the quote of Erin Gruwall, “Don’t let the actions of a few determine the way you feel about an entire group. Remember, not all Germans were Nazis.” The same goes here. Deal with the offenders and not the entire shopping population. However, keep in mind, care must be exercised in dealing with serial returners. There may be legitimate reasons for their behavior. Learn why, then act accordingly.
Strict returns policies often are treating the symptom and not the cause. Retailers need to work harder to understand what wen’t wrong in the buying process to so they can mitigate customers wanting and needing to return purchases. Improved POS in store, stronger online descriptions, better QA for consistent size and fit for apparel brands and so on all help.
Serial offenders should be handled 1:1!
Tracking down serial returners? Definitely a smart move! Retailers can start maintaining customer profiles with “return credit scores.” Return-prone customers can be easily identified and accordingly issued return-shipping fees plus eligible return window. Additionally, another easy way out to deal with returns is implementing omnichannel initiatives. It’s evident that customers want to experience and feel a product before actually buying it. So, brick-and-mortar presence is quite significant. Strategies like BOPIS and BORIS not only guarantee faster order fulfillment but also save retailers’ delivery and reverse shipping costs.