The numbers aren’t good for online sellers who are dreading holiday returns as coronavirus fears and lockdowns change shopping behavior. Signifyd found that two verticals with the highest return rates in general (Electronics & Computers, and Apparel, Accessories & Footwear) saw return rates rise 80% during the pandemic.
Fickle shoppers and “wardrobers” (those who wear an item and then return it) are chronic problems for retailers, but criminal activity also contributes to the challenges merchants face.
A recent example: the Department of Justice charged a Rhode Island man with fraud, alleging he ordered thousands of products from Amazon and replaced the original products with lesser value replacements, “often items different than the ones he originally ordered, before returning the packages to Amazon for refunds,” according to the DOJ press release.
There are also professional crime rings engaging in returns fraud, according to Mike Cassidy, Lead Storyteller at Signifyd, which helps merchants combat fraud.
“You can search the web and find services that will conduct returns for consumers who are looking for a way to game the system,” he said. “Sometimes the professional returners will send back a knock off product. Sometimes they will send a broken or damaged version of the actual product. Sometimes, they’ll simply send back an empty envelope or a box filled with sand. In return, the crime ring takes 15% to 40% of the refund they secure on behalf of the consumer.”
Cassidy said sometimes returns abuse is murky. In a survey Signifyd commissioned in January conducted by market researcher Upwave, 13% of consumers said they had made a purchase with the intention of eventually returning the product.
“These are people who buy a suit or a dress or some other item with a plan to wear it or use it once and then return it when they no longer need it,” he said. “Or they buy several versions of the same apparel item in different sizes. They keep the version they like best and return the rest.”
But it goes further – “Sometimes a customer will tell her or his credit card company that the item never arrived in order to get a refund while keeping the product.” In its September survey, Signifyd found over a third of respondents said they had falsely claimed that an online order never arrived in order to keep the product and get a refund.
“That number was up from about 8% who said yes to a similar question in our January survey,” Cassidy said.
Online merchants – especially those in apparel categories – struggle with the issue of “bracketing” that Cassidy referred to.
Bracketing is when a consumer orders multiple pieces of virtually the same item (varying color or size) and tries them all at home to determine which is most preferred to keep and then returns the remaining items, explained Chelsea Duhs, founder of 360 ID Tag, which sells tamper-resistant tags to reduce returns fraud.
She pointed to a recent post on her company’s blog where she described three potential solutions to help mitigate bracketing, summarized as follows:
- Implement prohibitive re-stocking charges that would likely reduce online consumer tendency to engage in bracketing.
- Give shoppers more confidence by providing accurate sizing, color, and style representation on the website so they don’t feel the need to order multiple items.
- Incorporate ‘Try On Online’ features, “allowing shoppers to download their image and position the different merchandise on their photo, giving the online consumer a much better sense of a real-life try-on experience.”
Bracketing is not just a problem in fashion, as confirmed by a survey of 2,000 online shoppers in July conducted by Yotpo, which offers solutions to help brands engage with customers.
Yotpo’s survey found that 35% of consumers across all industries said they sometimes buy more products than they intend to keep due to the ease of returns. For Millennials, the number was 43%, and for Gen Z, the number was 46%.
Tracy Strauss, Vice President of Marketing at Yotpo, said “In the fight against returns, it naturally follows that the best tactic is guiding shoppers to the perfect product the first time around.”
She said it’s critical to bridge the online-offline gap with reviews and ratings, as well as user-generated photos and videos, to help customers make the right purchase decisions. “All of these can help relay important product information, while simultaneously conveying a sense of authenticity, helping potential buyers to envision how your products might look in real life.”
But how can sellers encourage customers to leave reviews? Request reviews through text messages (SMS) to take advantage of its high click through rate, Strauss said. “SMS review requests see a 66% higher conversion rate compared to email review requests.”
A majority of customers cite customer reviews as very important in inspiring a purchase decision. “If you’re collecting high-quality reviews and UGC (user generated content) and displaying them intelligently onsite, you can help shoppers avoid the most common returns pitfalls,” she said.
But Yotpo’s Strauss also said returns are not necessarily the kiss of death for businesses. She pointed to fashion brand Draper James which found that customers who make returns are more likely to re-engage with the brand than customers who just purchase something one time and then they’re done.
“Post-return is an optimal time to start a conversation with a customer,” she said. Apologize and ask why they returned their purchase. Then, offer them an incentive to re-engage with your brand based on why they returned in the first place.
“Was the item broken? Offer to send them a new one free of charge,” Strauss suggested. “Did they buy the wrong size? Give them 10% off their next purchase. Didn’t like what they bought? Suggest some other product options and send a coupon for five dollars off.”
Merchants can drive overall customer satisfaction and higher lifetime value by offering flexible return options and reengaging returnees via SMS and email.
That may be true when selling on your own website but may not apply to marketplace sellers where shoppers are searching the platform, not necessarily individual sellers’ listings.
Having to offer return policies that are more generous than they would prefer is a reality for sellers on marketplaces such as Amazon and eBay. This year, merchants who had already made peace with Amazon’s annual extended holiday-returns policy received a surprise – the marketplace extended the return policy even further, presumably in an effort to encourage early holiday shopping.
Typically the Amazon Extended Holiday Return Policy gives buyers until January 31st to return items delivered between November 1 and December 31. But this year, orders delivered between October 1 and December 31, 2020, are returnable through January 31, 2021.
“The Auction Professor” offered some advice to eBay sellers on how to handle returns in a video on his Youtube channel. He also warned this year could be one of the worst for returns-related ripoffs due to the pandemic.
A finding that some sellers may feel adds insult to injury is that many shoppers believe retailers should offer free returns. ShipStation found that was the case for 89% of consumers it surveyed, with an additional 85% expecting the process to be self-service, requiring no contact with customer service.
To help reduce the incidents of returns, Signifyd’s Mike Cassidy suggested sellers build good relationships with customers.
Over-communicate with your customers. If there is a problem with an order — unexpectedly out of stock, a delay in shipping etc. — let them know immediately. Tell them when the order will arrive and what cancellation options they have. Answer complaints and questions on social media. And remember, if possible, sometimes it’s better to respond to the individual, rather than hash things out on social media.
Carefully review your return policy. It should be clear and accessible on your website. The policy should include timelines for returns and refunds. Our January survey found that about 30% of consumers who filed a false item-not-received chargeback said they did so either because they couldn’t find the retailer’s return policy or because it was too complicated to follow.
Make sure your product images and descriptions are accurate and clear. About half of the respondents in our January survey said that the reason for their most recent return was because the item they received was either the wrong size, color or material. Another 35% said they received something that was different from what they expected. If consumers know what they’re getting they are much less likely to return the item or to try to game the system to get their own retail justice.
Re-evaluate your shipping policies. Do you require a certain order size for a consumer to get free shipping? That can encourage a shopper to put an expensive item or two into her or his basket to meet the limit, only to return them later. Think about whether free shipping is ultimately increasing your average order value or simply costing you more because of the returns.
While Cassidy said he didn’t have data on whether challenges of returns are different depending on the ecommerce platform or whether the retailer is a brand or marketplace seller, he did offer the following advice:
“It is true, particularly when professional return fraudsters are involved, that a retailer or brand will face more frequent attacks, if it gains a reputation as an easy mark.”
Yotpo published a report with further advice for sellers on reducing ecommerce returns, which you can find on the Yotpo.com website.
And you can find additional tips on preventing returns fraud on Signifyd.com.