What eBay sellers can teach retailers about avoiding returns

With razor thin margins, a return leaves an eBay seller out of pocket. The same is true of larger retailers, or course, but for the individual seller it’s personal.  They care because it’s their money.

Not only is it the cost of lost product and postage that hits the seller, the eBay ratings system means that a seller’s future trustworthiness and margins may be impacted by a return.  Customer experience is quantified. Good sellers achieve better prices than unknown or poor scoring ones, so maintaining ratings are really important.

Returns send a chill through their hearts in a very direct way – and experienced eBay sellers have devised tactics to avoid them.  Some of these tactics are also highly applicable to larger sellers and correlate to how Clear Returns helps tackle returns in larger, complex organisations.

Pain in the wallet drives prevention

The thing that hits an eBay seller’s wallet hardest is the non delivery claim. A seller has to balance low postage costs to stay competitive, with the more expensive certainty of a signature. Plenty of items are sent without any proof to protect the seller and whatever has gone wrong, the buyer always get the benefit of the doubt. The seller has lost their product, shipping costs, has incurred eBay and Pay Pal costs and is thoroughly out of pocket.  But a seller can’t afford to risk their reputation, ratings and right to sell on eBay by obstructing the return, even when a seller suspects a buyer is exploiting that with false claims.

One way eBay handles this – something Clear Returns has also tackled in a different, more appropriate way for multichannel retailers – is to allow sellers to block potential purchases from future transactions.  This in theory helps prevent bad buyer behaviour escalating – at least with the same seller.  The seller community also effectively polices buyers, and buyers are rated in the same way as sellers.  A buyer with repeat suspect behaviour may find themselves blocked, meaning genuine buyers and sellers both benefit.

Not all customers return equally

When a good customer misses out on a buying product because it is out with a known fraudulent shopper (who is less price sensitive than the customer who was planning to keep it) but retailer and shopper lose.  The way Clear Returnshas brought this important customer level actionability to large retailers is through our predictive data platform, which scores and segments customers based on what they keep, then allows automated service responses during and post transaction. The return can be prevented before it occurs.

Good shoppers having a bad experience can be better serviced, fraudulent returners and particularly wardrobers can be effectively blocked.  The seller is protected, good shoppers stop subsidising the cost of fraud – and get an improved overall experience.

Closing the expectation gap

The eBay seller has to reduce the risk of surprises for the buyer in order to minimise the likelihood of a return. While this is more complex for enterprise retailers, at its heart the challenges are the same

Apart from delivery issues, an eBay seller is most vulnerable to those returns caused by expectation gaps and quality control issues.  They are are not obliged to offer refunds because something doesn’t fit  – only if they fail specifically to deliver on a promise.  Providing good measurements and fit information will cut down on questions and get a better sale price, because it reassures the buyer – but ultimately the buyer chooses what they are prepared to pay for something that may or may not fit.

What the seller has to do is reduce the risk of surprises for the buyer – with good descriptions, correct labelling information, images from multiple angles – and most important of all, highlighting and photographing any flaws or faults.  After delivery issues, undisclosed flaws and mis-description are the key causes of returns. And as many retailers will recognise, the nearer the top of the price range the item sells at, the less toleration the customer has for product issues.

Awareness of the scale of the problem drives action

Because the eBay seller feels the pain directly in their pocket, and because for the most part they have a very simple supply chain and touch most parts within that process, their hands on tactics for reducing returns have become pretty sharp.  The data is very real to them, even if once the return occurs, they have little choice but to understand why and ensure the same thing doesn’t happen again.

The enterprise process is far more operationally complex – yet at its heart the issues are the same. First the scale of the problem needs to be understood – from data comes insight, then action. It is by closing the expectation gap, spotting problem products, tackling the major cost points and differentiating problem customers from the majority of good shoppers that ultimately determines profit.

Posted by Vicky Brock

Why retailers should wait for returns data before celebrating Black Friday

Many UK retailers said that Black Friday was a big success with Amazon UK selling 64 items per second on the day and consequently ‘winning’ Black Friday. But is the celebration of what seems like a huge surge in profits for retailers premature?

‘Despite all the fighting in the isles on Black Friday and Cyber Monday, it’s way too early to determine the winner of this match’, said Vicky Brock, CEO of retail returns company Clear Returns. ‘Until the returns data comes in over the coming weeks–and return rates could be as high as 50 per cent–it’s too early to tell who’s “won” these big sales days’.

Visa estimated that £360, 000 would be spent per minute in online stores on Friday, but after Clear Returns’ analysis, it could be that the fuss of big discount days placed right before Christmas might not be worth it for retailers.

The problem is in the way the discounts on these days are set up that make products especially likely to be brought back.

‘All the preconditions necessary to drive up returns are in place’, said Brock. ‘You have a time sensitive offer placed alongside a sense of scarcity and panic, which appeals to over-buyers who make their selection at home post-purchase and panic buyers who get caught up in the emotion of the frenzy and will likely later return the products they did not mean to buy in the first place’.

No respite will be offered by Cyber Monday as shoppers take to their favorite online stores and scroll through for discounts on their favorite electronics, avoiding the city center crowds. Online stores typically have a far higher returns rate and a higher cost of servicing returns than physical stores.

It has been estimated that around £650m was spent online on Cyber Monday. But one-third of online sales on any ordinary shopping day are returned, so imagine the difficulty online stores could face when you take the formula of big business sales days and combine it with online buys.

Retail Week recently estimated that 600, 000 unwanted presents bought on Black Friday and Cyber Monday will be returned by shoppers after Christmas. Post-Christmas returns are a huge loss for retailers, but at least it is an expected one What is not expected are the exceptional levels of hype-driven returns that will be flowing in during the days prior to this peak trading period.

Clear Returns says that we need to not only focus on post-Christmas returns because the timing of post-Black Friday and Cyber Monday returns us also seriously problematic for retailers who are busy fulfilling production during the days leading up to Christmas.

‘I do think we’re going to see peaks in returns just before Christmas and profits will tumble as a result, especially since returns are rarely treated as a priority. Returns are the things that often get tackled only after the warehouse has dealt with outbound fulfillment, meaning that those pre-Christmas returns are just going to sit there. There will be nowhere for the returned stock to go except into January sales or clearance channels’.

Once the costs of returns have been subtracted from the products sold on Black Friday and Cyber Monday, there may be some retailers who are putting away the celebratory champagne and really reassessing the effectiveness of it all.

Posted by Lisa Monozlai

Offline versus online – the key differences in consumer behaviour

Offline versus online, consistently the channels are being merged – but how different is consumer behaviour between channels? Clear Returns investigate.

A recent study of 2,000 consumers, reported in the Retail Times, found major differences in how men and women prefer to shop in brick and mortar stores. Women not only spend almost five times more per year, but also spend much more time comparing merchandise and trying on clothes. Men, meanwhile, tended to enter the shop on a mission, buy the item and leave, even though they were just as likely as women to consult a salesperson about their purchases.

Women spend 5x more than men and spend more time comparing merchandise

Interestingly, this pattern doesn’t necessarily hold true online. Research by the Clear Returns team shows that men and women behave similarly in the online retail environment, with the majority of shoppers spending similar amounts of money on similar numbers of items regardless of whether it was menswear or womenswear. This may be because many shoppers we interviewed said they found shopping in brick and mortar stores to be a fun day out, while online shopping may be more utilitarian. However this can also be true in reverse. Some shoppers enjoy no more than a browse of their favourite stores online and hit the shops when they are fulfilling a specific, pre-determined need.

Women were 16% more likely to buy extra items with the intent of choosing their favourites and returning the ones they didn’t like

One pattern does hold true, however. Women were 16% more likely to buy extra items with the intent of choosing their favourites and returning the ones they didn’t like. This mirrors the extensive comparison shopping seen in the study of shoppers on high street. Recognising this need can help online retailers adjust their website content to help their customers comparison shop without having to make a purchase and return.

UK online retail fraud

“It’s much easier and more lucrative to steal on the internet than it is to go out and rob a bank.”

So claims MP Keith Vaz in a new report on cybercrime and fraud in the UK. This report shows that compared to other EU countries, UK citizens and retailers are prime targets for internet crime. Part of the problem is poor policing of online venues. A further problem for enforcement is the lack of methods for detecting fraudulent behaviour.

Online retail fraud grew by 23% in the UK in 2012, causing a £16.1 billion cost for retailers according to the National Fraud Authority’s 2012 report. However, Computer Weekly reported last week that 22% of retailers don’t know how much of their revenue is lost to online fraud, and 20% do not have anyone on the loss prevention team assigned to tackle the problem despite listing the lack of fraud detection and analytics tools as a top concern.

Research by the Clear Returns team has found that although fraudulent shoppers are typically 1% or less of the consumer population, they can be responsible for up to 10% of the cost of returns. Each of these shoppers cost the retailer an average of £1300 annually, although some individuals can cost up to £5000. Clearly more needs to be done to improve current methods of tracking customer purchases to enable retailers to distinguish fraud from activity by legitimate, high-value customers.

Posted by Shaylon

Online returns – the key facts

Micros, global technology provider to the retail sector, have published their Online Returns & Refund Report for 2013 which has some interesting insights, here we round up the key facts for retailers.

The report evaluated 222 UK retailers across sectors such as fashion, kidswear, electronics, health and beauty, sportswear, homeware and department stores. Of these 222, 169 were multi-channel retailers and the remaining 53 sold purely online. These retailers were measured on several key areas including: returns options given, the customer procedure involved, associated costs, refunds and return policies.

Only 55% of retailers offered a sufficient choice of returns options

One key finding from the report was that only 55% of retailers offered customer’s a sufficient choice of returns methods.79% of online retailers only gave one returns option for their customers, 62% of which insisted on post as the only form of return. While multi-channel retailers increasingly allow online returns in store, 41% still do not support this option. These results really call into question the convenience of online returns. However certain sectors do provide better options than others, fashion retailers for example are most likely to offer choice as do the larger retailers.

More than half of retailers provide no returns label in their online packaging

When it comes to customer’s process to return, an astonishing finding is that more than half of retailers provide no returns label in their online parcel. This then forces the customer to contact customer services either via phone or email which is sure to detract from a positive shopping experience and create extra hassle where there should be none. Adding to this hassle is the cost to return, over half of retailers surveyed in this study failed to cover these costs with online retailers being the least likely to cover returns costs.

16% of retailers now use the Collect+ service

One other key fact to note would be the significant increase in Collect+ returns with 16% of retailers offering this service,up by 15% since the previous report in 2010. This would tie in with a recent Drapers article which estimates that click and collect services will be worth £4bn by 2018 due to it’s convenience for customers.

Positives from the report show that 60% of refunds were processed within 4 working days, which is excellent for customer convenience. Although over half of retailers failed to acknowledge this with customers highlighting that much still needs to be done to improve this process.