Today’s retail landscape is tough — and getting tougher. Businesses are under increasing pressure, from reduced margins to online competition, and now they’re facing another problem. I’m talking about “serial returners” — people who deliberately buy more items than they plan to keep and know they’ll return some of them later.
This buying behavior is having a huge impact on UK retailers, one-third of themreport that they have seen an uplift in serial returners over the last year — with retailers of high end products seeing returns rates as high as 50% during holiday shopping periods. This rise is putting additional logistical pressure on retailers, and it is also contributing to a hefty annual £60bn returns bill for them.
Unsurprisingly, retailers are now considering what they can do to handle this troubling consumer habit — and some have even started taking action. Last year, Amazon pioneered a move to ban repeat offenders and started closing accounts of customers who “request too many refunds.” On the face of it, Amazon’s action is sensible; it ensures they can continue to offer the lowest price possible to their customers. It doesn’t surprise me that other brands are starting to follow their lead.
Following Amazon’s lead, nearly half (45%) of brands are now considering banning customers that return too many items, including Sephora and Nordstrom. And other retailers are also putting plans in place to combat the situation too. Some brands, including Victoria’s Secret, now track how often shoppers make returns and whether they are abusing stores’ return policies. Similarly, Costco reserves the right to cancel the memberships of customers who make frequent or expensive returns.
Returns are incredibly expensive for retailers of all sizes, particularly as e-Commerce businesses often operate on small margins. Almost half of all retailers claim their margins are being impacted by the cost of handling and packaging returns. Some companies find that it can cost double the amount for a product to be returned, as it does to be delivered. With payment refunds, customer communication and restocking warehouse shelves all costing money and valuable staff time, returns have an immediate impact on retailers. Items coming back for return can pass through as many as seven members of back-office staff — and each of these steps adds hugely to the cost.
And there are other side-effects that require additional operational manpower. For businesses with a “stitched-together” back-end model, multiple processes must be done manually once an order has been placed. This includes updating a stock system, filling out replenishment reports and manually amending every single sales channel — all of which make returns particularly cumbersome. They also render sales and profit forecasting redundant, which could spell…