A small group of shoppers are causing ecommerce retailers more than their fair share of returns pain.
Clear Returns has found that for some unfortunate retailers, up to 10% of returned product comes from a tiny proportion of shoppers who buy merchandise with the full intent of using and returning it.
The US National Retail Federation reports 65% of retailers are experiencing use and return fraud. Our data shows that to be an underestimate for ecommerce channels.
From dresses to drills, ladders to – yes – lingerie, “wardrobing” as it often referred to is particularly prevalent online. (After all, there’s all the convenience, plus you don’t even have to look anyone in the eye!)
Returns from online are also particularly costly – the goods don’t simply go straight back on sale as shoppers often assume.
The costs the use and return shoppers generate as they indulge in their wardrobing (or shouldn’t that be shoplifting with added costs?) include two way fulfilment and postage, stock spoilage, repackaging, cleaning and margin impact. They keep product out of stock at the very point of peak demand.
They negatively impact the experience of other shoppers – causing lack of product availability and impacting product quality. A returned product is more likely than clean stock to get returned again, so the cost burden spirals.
And it is not just costs that your loyal customers are picking up – wear and returners are rumoured to be a health risk too and can cause brand damaging PR stories. Whether justified or not, Urban Outfitters, Abercrombie & Fitch and Victoria’s Secret have all been on the receiving end of bedbug scares that can potentially be linked back to returns.
Clear Returns’ Predictive Data Scientist explains: “Bedbugs don’t travel directly on skin, making it unlikely they spread by people who simply tried on an item in store and disliked it; rather, they more likely come into stores from people who kept items for quite a bit before returning them. (Luggage, mattresses and bags are particular bedbug favourites.) Ongoing research by the University of Minnesota indicates that the most likely route of transmission of bedbugs into retail establishments is in merchandise that has been exposed to parasites outside the store (ie, via wardrobers)and deems the returns handling area as high risk.”
Bedbug scare stories may horrify loyal shoppers, but they are by no means to most irritating thing about the use and return problem.
This behaviour escalates if left unchecked
Clear Returns has found the typical seasoned wardrober sends back more than 20 items a year and their behaviour escalates once they know they can get away with it. Given a suitable returns window, they hold onto merchandise for longer than an average customer, meaning they keep the product out of stock longer, just when it is at peak margin potential.
Like shoplifters, many share information, including soft targets and tips to avoid detection. Wardrobers we’ve interviewed even admit they’ll deliberately damage a product in order to return it, if required.
So what can a retailer do?
Bloomingdales have famously gone for the high visibility label, but this risks driving up damaged product rates and doesn’t work for all product types.
Clear Returns fundamentally believes that the key to managing returns problems comes from understanding the root causes in a timeframe you can act on. The means assessing product performance and customer value based on what is kept, not just what is bought.
ECHO, Clear Returns’ management information tool, not only predicts which items will be returned, automatically alerting on the products having the biggest business impact, it also gives the retailer unprecedented insight into the type of shopper predominantly behind the returns of a specific product. This is essential in tailoring an appropriate response.
Loyal shoppers mainly return problem products, or those where there was an expectation gap between what they ordered and what they received (including, but certainly not limited to, fit). Immediate action to tackle issues with these products reduces losses and improves customer satisfaction.
Wardrobers, use and returners – they’re different. Despite what they tell you, or the return reason code they check, there is nothing wrong with the merchandise that isn’t a result of it being exposed to them. A different set of responses are required.
Like credit card fraud analysis, Clear Returns looks at ecommerce returns fraud in forensic detail. We do the “big data” heavy lifting for you. Using SEER, which looks at distinct patterns of behaviour in what shoppers actually keep, we identify the wardrobers already in your business, so you can change tactics. And we spot them as they buy online – giving you control over what happens next (including the option not to fulfil the order, or not to accept the return).
Wardrobers are a tiny segment of shoppers who are having a disproportionately high impact on returns, business profits and customer experience. It’s not cheek, it’s fraud – and we have the information to help you, the retailer, fight back.