Will return bans burn retailers that impose them?
Product returns represent a tricky situation for retailers. On one hand, research shows that generous return policies are a factor that drives retail sales. On the other, processing returns is expensive, particularly when fraud is involved. To address this negative aspect, some retailers including Best Buy are turning to third-party vendors to track and limit the amount of merchandise accepted as returns.
A Wall Street Journal article, citing a National Retail Federation survey of 63 retailers, reports that 11 percent of sales are returned, with 11 percent of those being fraudulent.
In the case of Best Buy, the retailer is working with The Retail Equation, a firm that tracks consumer shopping and returns behavior to determine if it fits the profile of fraud. If a customer is flagged, the system will impose a ban on returns and exchanges for a period of time. Other retailers that work with the firm include Home Depot, J.C. Penney, Sephora and Victoria’s Secret.
While limiting returns may help reduce costs, there’s also the potential for alienating good customers. The Journal article pointed to customers who were frustrated by a policy that is essentially hidden from plain sight until a ban is placed.
Dave Payne, a public relations professional, was one of those highlighted in the article. He received a warning after returning items with receipts to a Best Buy store in Orlando. “Best Buy advertises a 15-day return policy, but they are not advertising that at some point when you’ve crossed an arbitrary line, that policy no longer applies,” he said.
Product returns made the news recently when L.L.Bean revised its lifetime satisfaction guaranteed policy to cover items for a year after purchase.
“A small, but growing number of customers has been interpreting our guarantee well beyond its original intent,” wrote Shawn Gorman, L.L.Bean’s executive chairman, on the company’s Facebook page. “Some view it as a lifetime product replacement program, expecting refunds for heavily worn products used over many years. Others seek refunds for products that have been purchased through third parties, such as at yard sales.”
While some retailers placing more limits on returns, others are looking to simplify the process. Walmart introduced Mobile Express Returns last October to enable customers who purchase items from the retailer online to process returns in 35 seconds or less. The retailer is adding the feature to its mobile app this year so customers can more easily return items bought in its stores.
- How Your Returns Are Used Against You at Best Buy, Other Retailers – The Wall Street Journal
- L.L.Bean ends its famous ‘lifetime replacement’ guarantee – RetailWire
- Walmart seeks online edge with 35-second returns – RetailWire
DISCUSSION QUESTIONS: Do you think that retailers using in-house or third-party systems to limit returns are on the right or wrong track? Do companies such as Best Buy need to be more transparent about the system they have in place to track returns to avoid alienating customers?