Everyone knows a serial returner

Why are retail returns such a great conversation starter?  I start by telling someone about my new job at Clear Returns and invariably receive a response such as “You should speak to my mum, she orders stuff constantly, keeps nothing, returns the lot”.  It seems everyone knows someone who is a serial returner.

 

Customer-focused retailers have educated and incentivised this behaviour, with free shipping and returns and direct mail campaigns with sales, promotions and voucher codes.  Now they are waking up to 1 in 3 items being returned and all the associated loss of profit margin, operational costs and fluctuating stock levels.

 

When I talk to my friends about their online shopping intent, they reflect back the shopping behaviours retailers have encouraged:-

 

“When  I buy from ASOS, I’ll buy much more than I’m intending to keep as if you spend over a certain amount, you get free delivery. And I like trying it on – even though I don’t keep it!”

Jo, Glasgow

 

“Emails with extra discount always good….Nike are great for it. Usually order a couple of sizes as can’t be bothered doing an exchange. Order much more than I ever keep!”

Nina, Glasgow

 

“I’ve just bought a dress for black tie event – ordered 6, kept 1”

Jen, Edinburgh

 

“I also buy items in different sizes, and return some/all. I’m a sucker for a sale.”

Lesley, High Wycombe

 

“Love click & collect too! To return stuff. Won’t buy if returns not free”

Lindsay, Glasgow

 

For some customers though, returns are just an inconvenience-

 

“I buy everything online and usually not more than one of the same thing cause I hate having to go to the post office to return it.”

Kate, London

 

But there are also products that customers never, or rarely return-

 

Ever return beauty stuff? “Nope because I always buy the same brands”

Lisa, Glasgow

 

“Homewares is a different scenario altogether. You know exactly what you’re going to get cause you’ve seen it in nearly every shop but can’t be bothered carrying it around. Home-wares 0% return”

Julie, Dundee

 

Now imagine, a retailer having this level of insight on every customer who buys online. Instead of marketing campaigns focusing on sales only,  products can be targeted to the customers that will keep them.  Because it’s not a sale until the customer keeps it.

 

Using big data analytics, Clear Returns matches customers to the products that they keep, reducing returns and saving profit margins.  Clear Returns can predict, before the point of purchase, the likelihood of the customer keeping the product with 96% accuracy.   

 

So not only will the retailers reduce costly returns but they will increase personalisation, improve the lifetime value of their customers and ensure that stock is available for the customers that will keep what they buy.  

 

Kay YoungKay Young
Senior Account Manager
Tel: 0141 554 4175
Email: Kay@clearreturns.com

How to handle the over-buying customers

The over-buying customer is a tricky customer to handle. They love to bring the shop to them, they buy a ton of clothing options online to try on at home, fully intending to return a large chunk of their purchases. They think they are a retailers golden customer and retailers may also see them this way, just look at how much money they spend, how many items they buy, how often they buy, but if a retailer doesn’t measure their return rate they can be getting the wrong picture.

Retailers may think the over-buyer is a golden customer, but they can be getting the wrong picture

Typically, success in marketing is measured by getting customers to buy more, so why wouldn’t this be encouraged? Well although this group can be profitable, the high cost of serving these customers as they continually return huge portions of their orders means the profit margin is very slim.

This group have a high cost to serve and provide a slim profit margin

Add to this the cost of the promotions such as free delivery or 20% off that retailers send to these customers thinking they are their most lucrative, and the margin becomes even slimmer. Certain over-buyers will use these incentives to their advantage and they can encourage their behaviour, particularly offers such as ‘spend £100 to get free delivery’.

Identify these people and adjust your targeting

So how do you tackle this behaviour? We aren’t suggesting that you scrap these kind of incentives, only target them to the people who are less costly to serve and more profitable. You can also encourage these customers to do their decision making in store, perhaps by making certain orders reserve and collect in-store only.

The Clear Returns model can identify these customers allowing retailers to take action to reduce the cost of serving them while still maintaining loyalty and customer satisfaction.

Beware the wear and return shopper

Wear and return behaviour is something many have reported on previously, but how do you spot it? How do you deal with it?

When we think of someone stealing from high street retailers, we usually think of shoplifters. But a small number of customers have developed an ingenious pattern of fraud that eats up profit margins. These customers—less than one percent of all shoppers—regularly buy outfits they can’t afford, wear, and return them in depreciated condition.

Wear and return shoppers impact product depreciation and margin

On the surface these shoppers appear lucrative since they’re big spenders, but they account for between 10-15% of all returns. After refunds and the other costs to serve are removed – the retailer actually loses money or essentially has paid those customers to shop.

Our research shows that a persistent wear and return shopper can cost an individual store thousands of pounds every year. Even in tiny numbers, they drain millions of pounds from profit margins.

They appear lucrative – but even in small numbers they can drain millions from profits

The statistical sophistication of the Clear Returns model allows us to accurately identify these sneaky customers, and separate them from people who were legitimately dissatisfied with their purchases. This allows the retailer to detect fraud and put a stop to the revenue-sapping behaviour.

Better understanding allows better targeting to this group

By better understanding customers behaviour, retailers can also better target wear and return groups. These aredefinitely NOT the key segment you want to be offering free delivery or large discounts to regularly, they will only cost you far more in the long run!

Can radical return policies really work?

Several retailers have opted to differentiate their return policies although last week online retailerSinger22 implemented a radical new returns policy that gives customers an additional 10% of store credit when they return unwanted items.

They view this as being a token of appreciation for repeat business and that the system cannot be abused due to returns monitoring.

Yet even the CEO Jon Singer admitted that instances of wear-and-return fraud would simply be ‘unfortunate’. With this behaviour costing around $18 billion in the U.S they may need to think harder about how to combat this.

Although this type of return policy may be the first of it’s kind, retailers have been experimenting with these for years. For instance footwear retailer Schuh offer a 365 day return policy which some believe encourages customers to abuse the policy.

Boden also offer a no quibble return policy allowing customers to return items within 3 months.

Although these strategies are aimed to increase customer satisfaction do retailers walk a thin line between keeping their customers happy and giving them too much freedom to abuse the system?

Customer Return Behaviour – The Serial Returner

A recent survey conducted by Clear Returns has investigated customer return behaviour and the growing trend of consumers continually returning garments they have already worn.

67% of survey respondents have returned items that they ordered online, with almost 40% returning several items.

Much more concerning is the statistic that nearly a quarter of respondents have returned items that they had already worn, basically committing fraud. 52% of respondents also said their friends had committed similar offences. The most common reason given was that customers would buy an item for an occasion, wear it once and then get a refund:

“My friend has WAG aspirations and regularly returns dresses to coast etc she has worn to an occasion. She has commented that more shops are putting labels on the outside now so she can’t hide them or pin them in. I think returning online gives her more anonymity but she has returned in store (rotates the stores she goes to).”

“Wore the clothes, damaged them, returned them claiming they were damaged on arrival”

“No point of keeping it if it was only going to be worn once.”

This behaviour is known as “de-shopping” and it is becoming increasingly common as is returns fraud. A recent publication by Tamira King and John Balmer on this issue provides some further insight.

Worryingly retailers may be encouraging customers to buy more than necessary by providing offers such as free postage or discounts. The survey results found that 22% of customers returned items they had bought on special offers such as these. This suggests that these perks from retailers are potentially detrimental as this may encourage more impulse buys that may cost them far more than they gain in sales.

Posted by Ellie