Search

Should retailers combat serial returning?

By Will Gillingham

Like them or loathe them, buzzwords and buzz-phrases have found a healthy grazing patch in the form of the retail sector, and one such phrase which was particularly touted last year was ‘serial returns’.

What this describes is the practice of returning an exceptional amount of purchases (usually clothing). These products have usually been purchased as a try-before-you-buy mechanism from a retailer who doesn’t offer such a thing, or to wear for a one-off Instagram shot before sending back.

Some retailers these days offer an uncapped, free-returns policy, and because of that, these ‘serial returners’ are, ostensibly, going about their business unchecked. And so, the question arises: should something be done about this? Should these prolifically returning customers be limited? Should retailers charge for returns? Or is there some other way to address this new culture of returning? We approached our community for the expert insight.

Returning is Good

Returns involve a refund, transport costs, and products sitting in limbo for an all-too-extensive period of time before they’re back out on shelves. And they’re good for business.

ReBOUND Returns summarises the theory into a single sentence: a serial returner means a serial shopper.

Charlotte Monk-Chipman, Marketing Director, ReBOUND Returns: ‘Retailers looking to combat their serial returners tread a dangerous line and may find themselves in the business of banning their most valuable customers. A high return rate doesn’t always lead to a loss-generating customer, with many serial returners often keeping more than they return. Let’s not forget that being a serial returner also makes them a serial shopper! As shoppers purchase more and more from you they become increasingly familiar with your sizing, fabrics and product fit. This means they become better at buying over time and so gradually return less and less in the process.’

Returning, for the most part, represents an active engagement with a brand. But it’s not only a key indicator of a healthy ecosystem, there’s also a chance that those returners are modelling and advertising your brand to an audience; it’s cheap (if not free) marketing.

Selfie

This is explained by Lisette Huyskamp, Head of Marketing EMEA at Optimizely, who discusses the perks of returning customers using the free service to model on Instagram.

She says: ‘Serial returning can be damaging for retailers but banning returns completely or making it a difficult process can hurt them more. Online shopping provides consumers with convenience, so returns should be equally seamless. Minimising serial returning has to start with understanding why it happens in the first place. Do consumers purchase one item in different sizes and colours or are they sharing photos on Instagram with the sole purpose to return it?

‘Social media influencers posting photos of items only to return them is the new norm. So retailers have to adapt. On the H&M mobile app, consumers can see items together with an Instagram post. Consumers want to see clothes on real people, so trialling new features and process to enable that, will help consumers make better purchases and fewer returns.’

Not only are returns a strong measurement of engagement; serialised returns are likely to be reaching into an audience which a retailer might not necessarily otherwise reach. And there is one other aspect which, surprisingly, benefits (yes, benefits) from returns: revenue.

The golden geese of retail are the loyal customers. Being confident in there being a safety net for every return (i.e. a free returns policy) is a concept which, as highlighted by parcelLab, engenders loyalty. It’s a symbiotic relationship; the one relies on the other. And as long as they’re both in place, the revenue flows.

Julia Henry, Post-Purchase Manager at parcelLab, explains: What would providing a no-fuss returns service mean to you? It would certainly create a positive impression of the retailer. And that’s gold dust in the increasingly competitive ecommerce landscape, because it engenders loyalty. Give your customers a great experience, and they’ll come back.

It costs five times more to acquire a new customer than to retain an existing one. And it’s almost 60% easier to sell to existing customers than new ones. Handled in the right way, returns can be a valuable business tool.’

Returns = loyalty, and loyalty = revenue. However, the implication of that sentiment is that retailers have a choice in providing a good returns policy, which isn’t strictly the case. The reality is that retailers’ hands are tied when it comes to the matter of returns.

Sitting with bags

Customers Expect Free Returns

There is an expectation around free returns. The practice has been going on too long and is being upheld by too many retailers for it now to be rescinded at scale. As detailed by SAS, if a retailer began to charge for returns again, customers may simply go elsewhere.

Andrew Fowkes, Head of Retail Centre of Excellence, SAS UK & Ireland: ‘Serial returning has turned into collateral damage for most retailers. More than a quarter (29%) of consumers are likely to return items they’ve bought, while 8% admit to purchasing a range of items knowing they will return many of them.

‘Some brands have responded by penalising the offenders. Yet the industry has already let the genie out of the bottle. Customers will inevitably gravitate to the retailers that offer them the best deals and most generous returns policies. To stay competitive in the long term, others will need to follow suit.    

‘Retailers, then, seem stuck between a rock and a hard place. Either clamp down and appear stricter than the competition, or encourage a culture of serial returning and suffer the tightening margins. The best policy lies in being more flexible to customer needs.’

Stock on shelves

This prediction has been corroborated by the customers themselves. In a survey conducted by UPS, a huge majority of European shoppers quoted free return shipping as a decider in making a purchase.

Kiel Harkness, Marketing Director, UPS UK, Ireland and Nordics: ‘Our 2017 Pulse of the Online Shopper study showed that 75% of online shoppers in Europe considered free return shipping an important consideration when purchasing from online retailers, with 37% of shoppers returning an online purchase in the previous year.’

Further to data on European shoppers, Klarna have conducted a survey on UK shoppers specifically, and discovered a similar trend.

Luke Griffiths, General Manager, Klarna UK: With returns now a normal part of online shopping, successful retailers will have to invest in a free, convenient and seamless returns process that their customers will want to take advantage of again and again. Our recent research into the attitudes of 2,000 UK consumers towards returns confirmed this — revealing that over two-thirds of shoppers consider free returns an essential factor in their choice of retailer. A further 78% said if a retailer offers free returns they’ll buy more with them over time. It might sound simple, but embracing and perfecting returns demonstrates that retailers understand their consumers — and are committed to making their lives easier.’

There’s significant data pointing towards the need for retailers to have a strong returns policy in place: not doing so would simply alienate the customer, and, while financially beneficial in the (very) short term, restricting returns would lead to tangible losses over a longer stretch.

However, that’s not to say that nothing can be done. Serial returning can be quashed, but it can be quashed in a mutually beneficial way which provides an advantage to both the customer and the retailer. Here are some approaches.

Holding box

How to Take Advantage of Returns

As we’ve already stated, an active stream of returns means an active engagement with a retailer. However, if this engagement isn’t represented on social media (i.e. the serial returners aren’t providing you with a beneficial outreach through social advocates), then it’s time for the tide of returns to be stemmed. But this doesn’t mean hindering the returns policy.

As Gabriel Fabreschi, UK Business Developer at Lengow, states, punishing customers is never the way forward. If people are returning products because they aren’t right for them, then visibility up front is key.

Fabreschi: ‘In order to avoid a high return rate, retailers and brands should not punish customers with tougher return policies, as this would be counterproductive against building long-term customer loyalty. Instead, it is important that product data is always up to date and contains as much information as possible. Returns are avoided by providing e-shoppers with as much quality information as possible (descriptions, videos, pictures, virtual fitting, AR apps, etc) before the purchase. It is very important to have full control over all your product catalogues on every sales channel.’

Swati Sharma, Senior Process Manager – Digital Research at eClerx Digital, supports this idea, and goes on to state that marketing could be optimised in order to identify and accommodate for serial returners.

Sharma: Retailers need to proactively study consumers’ buying patterns to ascertain whether the returner is even a chronic one and the amount of customer lifetime value that could be lost if the consumer moves away to competitors looking for a more relaxed experience.

‘A better approach is to prevent over-ordering in the first place instead of worrying about returns, which will occur regardless given the nature of retail experience. That is not to say that steps shouldn’t be taken to reduce returns as well: marketing teams should ensure that offers are not proactively delivered to these serial returners upon their identification. However, investing in processes that let shoppers be surer about how the product will fit in their environment such as try & buy, lifestyle imagery, keeping standard sizes, virtual fitting rooms, etc, would reap better returns in the longer run.’

Clarity is beneficial in most, if not all, aspects of a business. If a retailer has perspective on the ways in which returns are affecting their business (Instagram outreach, customer engagement, products hanging in limbo), and are seeking to limit the amount of returns they process, then clarity should always be the first word in a successful strategy.

High-fives

In Summary

Serial returning, despite its negative media attention and buzzword-style presentation, can be a perk for retailers. It points towards engaged, loyal customers, and can even, in certain circumstances, mean that those customers are providing social media outreach to a brand-new audience, equalling new revenue channels.

On the flipside, retailers don’t have much of a choice when it comes to returning. A free returns policy is now an expectation for shoppers, and not providing this would ostracise your customer base and force them elsewhere. It’s not about limiting returns or punishing those returning customers; it’s about turning returns into an advantage.

Returning is established and here to stay. However, as long as a clear returns policy, whether free or paid, is front and centre on your website, your customers will stick around. And you might just find those returns are more beneficial than you might think.

Will Gillingham, Content Executive, IMRG

Join thousands of other Online Retail professionals

Get unique insights straight to your inbox for free, and improve your understanding of online retail. Subscribe to Online Retail Weekly now.

Data Summit 2019 scroll banner