Retail giants shaking up the culture of zero cost returns

Retail giants shaking up the culture of zero cost returns

ASOS fires a warning shot at problematic returners

Fashion retail giant ASOS has long been known for its open-handed free returns policy, which gives shoppers the freedom and flexibility to try out new looks and styles. The policy has served it well and contributed to its brand position as a go-to for fast fashion of all kinds.

But in April 2019, the site announced a change to its return policies, stating that in addition to extending its returns period to 45 days, it may ‘investigate and take action’ and even deactivate a user’s account if there is an ‘unusual pattern’ of returns.

ASOS cited environmental sustainability as part of its motivation, a nod towards the carbon footprint of deliveries and the risk of un-resellable returns ending up in landfill. But for other companies getting tough on returns, there’s clearly a feeling that some shoppers have been taking advantage and that businesses can now begin to bite back.

Amazon has begun to ban customers for life in response to suspicious return behaviours, sometimes without warning or a clear explanation of why they’ve been excommunicated.

L.L. Bean, the US clothing retailer which has thrived for decades on its ‘lifetime’ returns policy, has had to rein it in to a still-generous 365 days, after ‘a small but growing number of customers have been interpreting our guarantee well beyond its original intent’.

And makeup giant Sephora, another name known for its generous returns policy, has begun emailing customers who have high return rates, warning them that their behaviour risks them losing their returns privileges altogether.

The rise of the serial returner

Since online shopping went mainstream, the offer of free returns from online sellers has been a big draw for customers. It knocks out some crucial fear-and-doubt elements that could be a barrier to purchase, like ‘what if it doesn’t suit me?’ ‘What if I don’t like it?’ and ‘what if I change my mind?’ Knowing that a purchase can be undone, no questions asked, makes it much easier to hit the ‘Buy’ button.

For some shoppers though, the no-risk return is less of a comforting safety net and more of a free-for-all. Retailers have begun keeping a closer eye on ‘serial returners’. These are customers who

  • Habitually buy multiple sizes and colours of an item and return the ones that don’t suit – known as ‘intentional returns’
  • Buy more than they can afford to hit a store’s free shipping threshold, knowing that they will return most of the items afterwards
  • Buy things to try on, snap for Instagram – or even wear on a night out – and then send them back

Some of these activities are outright fraudulent, others little more than inconvenient. And until recently, stores have generally opted to turn a blind eye to serial returns because overall, a generous returns policy is more profitable for them, according to research from the University of Texas-Dallas.

But it seems the gloves are off. As well as toughening up their return policies and tracking customer return patterns through their own CRM systems, some retailers have admitted to checking up on suspected serial returners’ social accounts to see if they can catch them red-handed in the act of wearing, photographing and then returning items.

It’s worth noting that retail return fraud is nothing new – it’s been a constant in the world of commerce for decades. But the rising volume of online shopping (ecommerce sales worldwide have doubled since 2012) combined with the return shipping costs retailers now incur, makes it a more pressing problem than ever before.

Other ways to cut the cost of returns

Returns are costing businesses dearly – something along the lines of £60 billion in the UK alone, and $640 billion globally. But are there ways to address the challenge without banning your customers or stalking them on Instagram? Happily, some less oppositional strategies do exist.

  • Give them longer to love it
    Counterintuitively, a longer return window might be a promising option for retailers struggling with the cost of high-volume returns. The University of Texas study discovered that although a more lenient returns policy was correlated with more sales over time, stores could actually decrease the number of returns by having a longer returns policy – something that ASOS may have had in mind when increasing their return period from 30 to 45 days.

    Possibly that’s because having longer to return something makes it less urgent, so we’re less likely to get around to it. Or given more time, we may get used to the item or notice things we like about it and decide to keep it after all.
  • Keep repeat returners out of the loop
    Mailing list filtering is a softer – if sneakier – version of the banning option for serial returners. Companies can track return behaviour and use it to filter repeat offenders out of emails about special offers and promotions, so that they’re less likely to go on a profit-bashing shopping spree.
  • Create virtual shopping experiences
    Turning to the technological side of things, AR solutions can help customers to literally visualise an item in their home or on their body, so they’re better able to decide what they want and less likely to be surprised or disappointed when the real thing is delivered. Shoefitr (now bought up by Amazon) used 3D scanning of the inside and outside of a shoe to help customers determine the probable fit compared to a standard size. As well as reducing returns, the technology reduced frustration for customers, with footwear being a notoriously tricky online purchase.
  • Put a big, big tag on it
    Prominent ‘no return if removed’ labels, as used by Nordstrom, are a very simple way to eliminate the type of return fraud that involves wearing or photographing items and then returning them. By making the labels large and colourful and putting them right on the front of a garment, retailers can eliminate the possibility of customers abusing their policies by wearing and returning items, while causing no real inconvenience to non-problematic shoppers.

Mixed messages

Despite all the retailer resistance, there’s been a rise in return-enabling strategies too. Try-Before-You-Buy (TBYB), despite being a potential knock-out blow for retailers already struggling with returns, is increasing in popularity. With this system, a customer is only charged for items they keep, so there’s no waiting for a refund after making a return. According to data from Brightpearl, 25% of retailers globally will offer TBYB by the end of 2019 – and 70% of retailers are seriously worried about this trend’s effect on their margins. Somewhat confusingly, Amazon offers TBYB to its Prime members – presumably the ones they’re not banning for life, that is.

The fact that some retailers are making returns easier and simpler for their customers, while others are actively punishing the behaviour, suggests that there’s divided opinion about the value of free returns, and the cost-benefit see-saw that has so far maintained some kind of consensus is at a tipping point. It’s a time of uncertainty.

In fact, a lack of clarity and mixed messages is one of the accusations levelled at retailers who are trying to stem the tide of online returns. On one hand, free returns are proudly marketed as a benefit for customers to take advantage of. On the other, these returns are being tracked and those who overuse them are penalised according to unspecified conditions.

What’s a savvy shopper to do?

If a policy states that online returns are free, can a customer really be blamed for over-buying and habitually returning? After all, adding multiple sizes and styles to an order is the equivalent of taking several items into the changing room at a bricks-and-mortar store – you’re not expected to keep them all. There are expenses associated with both the online and offline ‘try it out’ offerings, and they’ve been judged an acceptable cost of business for retailers for some time now. Less-than-honest returns, too, are a cost that has until recently been absorbed by retailers via price increases and other process adjustments.

Perhaps the real problem is that the goalposts have moved. The issue of retail fraud has been magnified by a wider pressure on retailers created by the sheer hugeness of online shopping and especially the acceleration of fast fashion. There’s no question that businesses need effective solutions to stop issues like wear-and-return. But a regular pattern of ‘intentionally returning’ online goods because you wanted to try several sizes or styles may be viewed by a customer as normal, expected behaviour. It’s within the letter of retailer return policies and until recently there’s been no indication that it might be penalised.

Rather than a rise in serial returners, perhaps the problem is (at least in part) an inability for businesses to fulfil their original promises to customers because of the rising costs they face. What was once accepted or tolerated is now unacceptable, and the push-back is being directed at shoppers who no longer have any idea what the rules are.

Maybe the real, long-term solution is for stores to communicate clearly to their customers what is and isn’t OK, and to be more transparent about their capacity to accept returns in the first place.

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