|Thu Apr 25 2019 14:57:06|
Returns Are the Hottest Thing in Ecommerce
By: Ina Steiner
Companies are falling all over themselves to make it easier for buyers to return things - PayPal, Amazon, and Kohl's among them. But there's a cold hard fact behind such initiatives: they help retailers gain information that can help them control returns abuse. Unfortunately, marketplace sellers don't have the same ability to identify and potentially block serial returners.
This week brought fresh evidence that retailers believe how they handle returns is crucial. PayPal is investing in Happy Returns
, leading a strategic funding round of $11million ("the same company that took the friction out of payments wants to take the friction out of retail returns," Happy Returns told us). And Amazon will soon allow customers to return purchases
to all of Kohl's 1,150+ stores.
PayPal may gain additional insight into returns behavior with its investment in Happy Returns - it will be interesting to see how it can leverage that data. (Update: Dan Davis connected the dots, responding to our tweet: "PayPal announces investment in returns service provider a couple weeks after announcing a change to their UA whereby PayPal will keep fees on returns and refunds." See "PayPal Just Made Returns and Refunds More Expensive.")
Unfortunately, third-party sellers on marketplaces such as Amazon and eBay have very little control over returns and little ability to spot returns abusers. And while the marketplaces themselves can spot serial returners, it isn't necessarily in their best interest to take action, since the seller bears the cost, not the marketplace.
Meanwhile, according to Bstock Solutions
, many retailers are re-examining their returns policies due to serial returners. It cites some interesting research including the following:
- Returns from online fashion purchases will have an impact of £6.6 billion for UK retailers
- US loss from annual merchandise return fraud is estimated at $17.6 billion
- 55% of UK fashion and clothing brands would consider ‘banning serial returners’
- Millennials (aged 25-34) are the worst culprits for wardrobing with 21% confessing to buying with the intention of sending back, closely followed by Generation Z (aged 18-24) at 19%
- Of those who have admitted to wardrobing, 55.6% of men had done so more than once in the last 18 months, compared to just 31.3% of women
- 69.5% of the 200 retailers surveyed believed that wardrobing was common
Bstock said further study on fraudulent returns indicates that the worst serial returners might also be a retailer's best customer. But while a shopper who returns an item to a marketplace seller may purchase another item on the platform, it might not be from the same seller, which is another reason sites like eBay may be loathe to punish serial returners.