With returns costing an estimated $640 billion or more worldwide, retailers are facing the headwinds of an ever growing phantom economy. In an article in the Financial Times, Clear Returns estimates that returns cost UK retailers £60bn a year, £20bn of which is generated by items bought over the internet. As the concern rises, and with the introduction of penalties such as Amazon’s lifetime ban on serial returners, we recently investigated the measures that retailers are taking to resolve this returning problem - and how their responses are being viewed by consumers.
As part of this report, we also asked four experts - John Reid, Managing Director at Garment Quarter; Nicole Leinbach Reyhle, Founder of Retail Minded and Author of “Retail 101: The Guide to Managing & Marketing Your Retail Business”; Hester Grainger, a personal stylist at Hester Styles and self-proclaimed ‘serial returner’; and Scott Hill, VP Product at Brightpearl - to share their thoughts on this growing 'serial returner' problem.
Here's what each of them had to say...
The Retailer View
by John Reid, Managing Director, Garment Quarter
"I think like most online and brick and mortar stores, we’ve noticed an increasing challenge with serial returners. We sell high-end fashion and designer clothing, and while our returns rate remains low, particularly compared to industry standards, it’s an issue which has become gradually more problematic for us over time - and one I predict will continue to snowball in future.
In my view, there are a few contributing factors behind the rise of the serial returner. Firstly, it is to be expected that customers need to see goods in real life and try them for size where applicable; but generous return policies, the introduction of Try Before You Buy (TBYB), as well as split payment options has helped to shape serial return habits.
Social media has also had a direct impact on returns, particularly for the luxury sector, where Garment Quarter operates. Some consumers, mostly a millennial audience, intentionally buy luxury items, for example high-end clothes, simply to capture them for their Instagram feed, before returning the products.
While the above example is an issue that may need addressing, I have less of an issue with shoppers buying multiples of items and returning some, as long as they do keep one or two items, and are genuinely ‘trying before they buy’, as this is a replication of the in-store experience. Those that have an issue with serial returners are misunderstanding a basic truth of retail, which is to provide as much convenience to your customer as possible.
That’s not to suggest retailers should accept serial return habits completely. Brands must consider returns strategies which work best for them, and that help offset problematic shoppers. At Garment Quarter we offer free returns as long as the item is returned within seven days. This approach works for us, as it means customers don’t sit on a product, and it allows us to receive returns and put them back into rotation much sooner.
Amazon’s decision to ban serial returners seems an odd commercial decision to make, when they could realistically absorb the cost. In my opinion, the move is not customer-focused and appears contradictory to the recent roll out of a TBYB offer to its Prime membership.
Amazon is a service retailer that has built its reputation on speed, price, convenience and delivery - but with this decision I question whether they are losing track of what made them the behemoth they are today in the first place - a total customer-focused approach. It remains to be seen whether this will cause a negative backlash, and how that impacts sales.
At Garment Quarter we wouldn’t follow this approach - at least not today, though I do understand Amazon’s decision. We’ve had a few isolated cases of chronic returners and if this group became more prominent and really started damaging our bottom line significantly, we would need to readdress, perhaps introducing subscription-based models, where customers pay a yearly one-off fee to cover the cost of returns.
For now, our focus has been on essential preparation - introducing technology that enables us to build a single source of information around customer returns, including the ability to monitor serial returners to see how the trend develops over time and whether we need to review our returns strategy.
We integrated Brightpearl into our business this spring, and its already expanded our data capabilities, giving us more information on customers such as their purchase history and the product lines they prefer, and return levels across individual product ranges. This insight is invaluable; it puts us in a much more informed position to make intelligent decisions that benefit our operations in the long-term.
The last word on Amazon - if the serial returner ban does prove to be a successful strategy, other short-term focused retailers may follow suit. In my view, it may help businesses to protect the bottom line initially, but it could have a damaging effect on customer loyalty. Serious consideration is needed to understand if the payoff is really worth it."
The Expert View
by Nicole Leinbach Reyhle, Founder of Retail Minded & Author of “Retail 101: The Guide to Managing & Marketing Your Retail Business”
"Online buyers are notorious for appreciating convenience in their purchase journeys, so it comes as no surprise that many of these shoppers buy things to review in the comforts of their homes and then often return them if they are not satisfied. Likewise, many buyers genuinely intend to keep items they order online but instead discover there is a reason they need to return something. Collectively, these actions add up for many returns that Amazon has identified as problematic. More precisely, Amazon explains that “we never take these decisions lightly, but with over 300 million customers around the world, we take action when appropriate to protect the experience for all our customers.”
From an operations perspective, every return made to Amazon costs them money. Factoring in both time and logistics, the cost of returns – even for a retail giant like Amazon – adds up. Keeping this in mind, I can appreciate the recent changes Amazon has made to those buyers who return items frequently. While I do think it may shift customers to shop elsewhere in some cases, I also think it will encourage customers to be more thought-sensitive to their purchases and returns alike. Ultimately, I think this will benefit other companies who will capture consumers who are frustrated or fearful of their purchases made on Amazon due to the potential risk of returns they may need to make – but this isn’t necessarily a bad thing if you look at it from a competitor’s perspective.
Another view to consider is how Amazon is changing the face of retail returns at large. They boldly partnered with select Kohl’s store locations to welcome Amazon returns – something completely out of the box for one retailer to do with another – yet this has proven successful for them and they have since expanded this partnership. It’s benefited both Amazon and Kohl’s – helping drive foot traffic to Kohl’s and even sales as a result while helping to elevate some of the frustrations of returns for customers and Amazon alike. Keeping this in mind, Amazon has longtime been recognized as changing the face of retail and their recent news of banning shoppers who make too many returns – as identified by their data tracking systems – is not something to be completely surprised by. Instead, it may be something for other retailers to learn from and consumers even, as well.
Retail is constantly changing and evolving as a result. Data, automation and artificial intelligence are all helping to drive this change, but customers still lead in identifying what truly impacts retail operations. Amazon recognizes that consumers have a huge influence on their infrastructure so their only way to help control this is to define more specific guidelines of their customer policies and expectations alike. I can appreciate this intent that they have, though admittedly I do think it will alter customer behavior in a way that may not benefit Amazon entirely. Then again, the cost of returns may well be worth the cost of losing some business. As time passes, however, one thing is certain. Amazon will surprise us all again with yet another change to reflect their current operational environment and expectations alike."
The Serial Returner View
by Hester Grainger, a personal stylist at Hester Styles and ‘serial returner’
Hester orders items every week, from a number of online retailers. She deliberately over-orders to ensure she receives free delivery on each order and orders multiple sizes – so the minute she places an order, she knows that a lot will go back. In total, Hester orders items totalling up to £300 a month – and returns up to two-thirds.
Hester is a personal stylist at Hester Styles and a self-confessed ‘serial returner’, who regularly, deliberately, over-orders clothes – either to get free delivery, or to try multiple sizes, colors and styles.
"I spend about £300 a month ordering clothes (my usual suspects include ASOS, New Look, River Island and La Redoute) and return up to £200 – i.e. two-thirds – of everything I order.
Most recently, I ordered six outfits for a wedding – and only ended up keeping one. I’ve had bad experiences with retailers who have taken months to pay back refunds, and as a result I keep a note on my phone about what orders I’m returning, and the amounts of money due to come back to me – so that I don’t miss any payments. But it hasn’t changed the way I shop.
In my opinion, ‘serial returning’ is now the way of the world. I think that as consumers, we want, need, expect – and deserve – multiple options. Especially with a garment that involves stepping out of your comfort zone. I think it’s normal to order different colors and sizes – especially when sizes vary so much from retailer to retailer.
When considering Amazon’s decision to ban shoppers who return too much, I think it is a dangerous move for retailers – and it would change my shopping habits if the retailers I regularly ordered from did this. Not only that, but it would change my opinion of that retailer.
I think ultimately, that retailers should trust their customers, and that there are many different reasons for consumers to return items, for example, sizes not being standard, wanting to try different colors, not being sure if a style or garment will suit.
If retailers had lower free delivery thresholds (some retailers have low thresholds, like ASOS, whilst others only offer it on orders of £50, £75 or higher), I would order in smaller quantities. In a nutshell, free shipping is crucial and it’s something that I look at first when I come across a new retailer. I’d go as far as to say that I wouldn’t order from a brand that had unfavorable shipping and return options."
The Technology Take
by Scott Hill, VP Product, Brightpearl
"Returns are becoming a serious issue. Americans return more than $260 billion in goods each year, while in the UK, the lost revenue from returns costs retailers £60bn a year, £20bn of which is generated by items bought over the internet.
Much of this cost can be attributed to a rising cohort of serial returners, with 40% of retailers seeing an increase with “intentional returns” over the past year.
This is proving to be an incredibly expensive burden for retailers to take on - particularly when almost half of retailers are already seeing their margins being severely impacted by the cost of handling and packaging returns.
As a result, businesses must reconsider their approach to serial returners. Amazon’s action to ban shoppers who return too much is sensible - it ensures they can continue to offer the lowest price possible to their most loyal customers. However, Amazon are only able to innovate their returns strategy because of previous investments in technology that allow them to track and identify those who return frequently.
This technology is now accessible to mid-market retailers. However, 69% of firms currently do not deploy any technology to manage their returns - a huge missed opportunity.
Whether to ban serial returners, flag them for removal from mailing lists that promote offers and discounts, or to charge them more to return items is ultimately a decision for the merchant. However, what is imperative is having technology solutions in place that centralize returns data. This provides the ability to track, monitor and understand all “serial returners” allowing for more informed and intelligent decision making around how to manage these problematic shoppers."
These viewpoints can also be found within our research report: Banned? A Returning Problem.
Download the report now to find out whether retailers are planning to follow Amazon’s lead and ban serial returners, and whether shoppers will accept potentially extreme punishments for returning too much.