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Keep Your Friends Close, Keep Your Serial Returners Closer

November 27, 2018

There’s been a lot of talk in the media recently about serial returners and the ‘damaging’ effect they’re having on retailers margins. Whilst L.L Bean merely shortened their lifetime returns window to a 365 day policy (and got a fair amount of bad press for doing so), Amazon and Sephora took a harsher approach by opting to penalise shoppers who make ‘too many returns’ by banning them from making future purchases. Strangely though, there seems to be much greater support of Amazon’s harsher crack-down with many retailers saying they’d like to follow suit.

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A recent study by Brightpearl, ‘Banned? A Returning Problem’, not only uncovered that 55% of UK fashion and clothing retailers would consider ‘banning serial returners’, but that shoppers also say they support the decision!

56% of shoppers surveyed stated that they believed Amazon’s intention to place lifetime bans on serial returners is fair. However, Amazon has not actually defined what constitutes a chronic returner in writing, so i’m sure these shoppers would change their tune if they were wrongly accused of exploiting a return policy simply by exhibiting normal online returns behaviour.

The retailers who choose to follow Amazon’s example tread a dangerous line. They don’t have the same data tools like Amazon do (and even giants like Amazon can get it wrong). In fact, the Brightpearl study also uncovered that despite being keen to crack-down on unruly returns behaviour, a staggering 44% of retailers admit they don’t even have adequate technology at their fingertips to identify a serial returner. So is it all just talk, or are retailers running the risk of going down this dangerous path?

Serial Returners may actually your best customers

Retailers often fall into the trap of categorising all serial returners the same. Loss making, bad customers who return everything they buy. It’s a common mistake, but we’re here to dispel the myth, the majority of your serial returners are not bad customers.

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We spoke to our Director of Data Innovation, Vicky Brock, whose experience in the retail and returns space, which includes founding Clear Returns, has led her to be able to accurately calculate the impact of serial returners for retailers. In her presentation at The Returns Revolution Conference, we learned that approximately 12 - 20% of customers generate 80% of your refunds. The downside here is that this percentage contains both your best and your worst customers. Retailers need to take a close look at their returns data to be able to distinguish between their different returner personas. This will allow them to take a well informed approach to their shoppers, and truly spot those abusing the system.

Vicky disagrees with the 55% of retailers who’d consider banning serial returners “this sweeping, harsh approach is incredibly short-sighted. It is a knee-jerk reaction which goes against the fundamentals of customer convenience, the very philosophy which retail is built on. Placing a ban on shoppers for repeatedly returning items overlooks the individual customer’s lifetime value and reveals that the retailer actually doesn’t understand their shoppers return behaviour well enough. Additionally, it is important to remember customers are simply responding to conditions that the retailer themself has put in place - free shipping, endless in-session upsells and multibuy offers encourages consumers to buy first and chose later. It is hardly surprising that returns increase as a result.”

All retailers know that if a shopper places an order with the same item in 3 different sizes, returns are inevitable, but retailers should not fear this type of behaviour. Typically this is an important step towards greater lifetime value as the customer tests new categories or brands they are familiar with. Multisize buying rarely affects more than 8% of orders and is far more likely to result in a greater lifetime value than a customer who buys one thing, returns it, and doesn’t buy again.

As Vicky’s presentation at The Returns Revolution demonstrated, years of data from multiple major retailers show that up to a specific threshold there is a direct link between the more items a customer buys per order and their profitability net of returns, as well as a clear mathematical proof that the more orders they make over time, the lower their refunds per order (as they become better at getting it right over time).

Don’t ban your serial returners

Remember that Brightpearl’s study showed that 44% of retailers do not deploy any technology to properly manage their returns data? Surely this should be the first priority for retailers? Once the correct technology is in place, retailers can then look at what actually is driving their increasing returns costs, and make smarter, better informed decisions.

A very small percentage of your serial returners are loss making, so retailers need to shift their priorities and look at other ways to better handle their returns and cut back the costs. Using the ReBOUND platform will give retailers better visibility of their returns, allowing them to understand what is coming back, why it’s coming back and especially relevant for this time of year, when it’s coming back into stock. Using a returns portal like ReBOUND’s intelligent returns platform will allow you to calculate accurate inventory forecasting and better plan your resources to handle your returned stock, especially important for peak season planning.

So there you have it, don’t ban your serial returners, understand them.

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