Are chronic online returners only a few bad apples?

Discussion
Photo: Getty Images
Jun 12, 2018
Tom Ryan

A new poll from NPR/Marist seems to show that the high rates of online returns are being driven by a small group of chronic returners rather than large swaths of consumers taking advantage of liberal return policies.

The survey of 1,057 adults found that 91 percent either “only rarely” (65 percent) or “never” (26 percent) return merchandise they buy online.

That leaves the remaining nine percent who “very often” or “often” return items responsible for driving the reported high rate of online returns.

According to CBRE, the commercial real estate services firm, online returns typically amount to 15 to 20 percent of overall sales, far outpacing the eight percent return rate for merchandise brought in stores. Some other reports have indicated that online returns can run as high as 40 percent for categories such as apparel and shoes where fit is critical.

The high return rates have largely been attributed to the many free return policies retailers offer. The poll indicated that free returns are important to consumers. Asked whether a free return policy influences their decision to buy online, 40 percent indicated “a lot,” 37 percent “a little,” and 22 percent said, “not at all.”

Yet the main reason shoppers kept a purchase they wanted to return was that the return process was too much of a hassle (54 percent). That was followed by missing the return window (22 percent), and the cost of returning the item being too high (16 percent).  “Some other factor” was eight percent.

Other findings on returns:

  • Sixty-six percent have “never” made an online purchase with the expectation that they will return at least part of the order, with 28 percent indicating they “rarely” do that.
  • Only two percent “often” or “very often” return items that they’ve worn or used.
  • Nineteen percent “never” and 79 percent “hardly ever” regret making an online purchase.

A recent Wall Street Journal article detailed how many retailers, including Amazon and Best Buy, are increasingly combatting excessive returners by warning and in some cases banning them.

DISCUSSION QUESTIONS: Does it make sense that only a minority of repeat returners are driving up the high rates of online returns? Do the findings from the NPR/Marist poll do more to justify free shipping policies or bans of abusive returners?

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"High return rates are a fact of DTC life."
"As the saying goes, “it’s the price of doing business” whether online or in-store."
"Can we blame consumers for devising their own methods of beating the system when they have been inspired to buy based on misinformation?"

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26 Comments on "Are chronic online returners only a few bad apples?"


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Paula Rosenblum
BrainTrust

In a word, no. It doesn’t make sense and it’s not correct, either.

Anyone who buys apparel through any kind of direct-to-consumer channel will tell you that they buy several items and pick the ones they like the best. So free shipping is a proxy for a fitting room.

For me, the findings are irrelevant. Sorry to sound so harsh, but high return rates are a fact of DTC life. They can be mitigated a little (with various “fit” technologies), but at the end of the day, it has been so since the catalog era, and will continue to be so.

Steve Montgomery
BrainTrust

Agreed. Who can blame someone who practices if it don’t fit, return it philosophy. Unfortunately, clothing, shoes, etc. manufacturer sizes may say they are the same but may not be or fit the same. This appears to be truer in women’s wear then men’s.

In a B&M store there is a fitting room where someone can try different sizes. At home there is not. It should be no surprise that the return rates are significantly higher for DTC.

Max Goldberg
Guest

A small percentage of online shoppers are driving the high return rates, just as a small percent of brick-and-mortar shoppers drive store returns. Some of these folks are gaming the system, but that doesn’t mean that e-tailers should make returns harder. The leading categories for returns, clothing and shoes, require proper fit, yet there is no way to try on an online purchase until the item arrives. If you are an e-tailer in either of those categories, you had better budget for high returns.

Mohamed Amer
BrainTrust
Mohamed Amer
Independent Board Member, Investor and Startup Advisor
1 year 3 months ago

Yes, the culprits are a definite minority and liberal shipping policies will be the industry norm.

Stepping back a bit, comparing the rate of return items between a store-only world and an online world is non-productive and wrongly anchors one’s expectations in a non-reproducible retailing epoch. Time to get used to new norms and expectations on purchase (and return) behavior that will vary greatly by merchandise category while not letting a bad apple spoil the entire basket.

The new retailing model is frictionless and chock-full of new conveniences, both in-store and online and across the ownership cycle. Those wishing to participate and flourish will adjust accordingly.

Dave Bruno
BrainTrust

As Paula said, high return rates are a fact of life for online retail. And even if chronic returners make up a disproportionate amount of the returns, retailers can not afford to make returns more cumbersome or difficult in response. People shop online because of the convenience, but they only do so with retailers they trust — and easy returns are a big part of that trust. We must do our best to provide comprehensive product/fit/sizing/quality information up front to minimize returns as much as possible, but we simply can not encumber the return process when returns inevitably occur.

Ken Lonyai
BrainTrust

There’s always going to be some variation of a bell curve distribution for online returns. Anything that has to do with fit, color, size/weight, or quality that has never been experienced by a consumer in-person is open to dissatisfaction and return. It’s part of the cost of doing business online. To try and mitigate returns by making them costly or otherwise restrictive is an invitation for shoppers to move on to more liberal competitors.

So three things that make sense and are about all that can reasonably be done by merchants are:

  1. Reasonably define what excess returns are and provide ample warnings to consumers that are approaching the line in an effort not to penalize them but work with them to find a happy medium.
  2. Emulate Jet’s model of offering shoppers a small per-item discount for (at the time of purchase) waiving the right to return the item unless it’s defective/damaged. It works especially well for CPG products
  3. Incentivize/reward shoppers that don’t make returns often.
Zel Bianco
BrainTrust

As the saying goes, “it’s the price of doing business” whether online or in-store. This will create, and in fact already has created, new businesses such as Optoro that have in effect become a new secondary channel for returned goods. Creative people will always find creative ways to solve these problems. Still, both online and offline retailers will need to find a way to deal with the “bad apples” to some extent or it will spoil the bunch of us who don’t take unfair advantage of the system.

Art Suriano
BrainTrust
Years ago a customer would go to a store, buy a dress outfit, wear it to a wedding and return it on Monday. In the ’80s a customer would go to a consumer electronics store, by a new TV and return it after watching the Super Bowl. Retailers got smart with how to deal with those issues and online retailers need to do the same thing. In life, it’s always that small percentage of those who take advantage and unfortunately make it worse for everyone else. The good news is today through technology it’s easier to get control of returns. For starters, an online retailer who offers a free return policy can state in their disclaimer that after “X” number of returns within “X” amount of time the customer will be charged “X” percent. Another practice for addressing excessive returners could be the retailer reaching out directly to the customer alerting them of their high return rate and warning them that they will be charged a return fee in the future. There are methods that… Read more »
Brandon Rael
BrainTrust

In concert with all of the other members, I believe that high return rates are simply part of doing business in a direct-to-consumer model. There is no way around offering free shipping, as that is the industry expectation.

The returns process remains one of the highest potential points of friction for online shoppers. Yet the majority of consumers should not be penalized for a small number of folks who overuse this process.

Until virtual reality and AR technologies mature, right-sizing customers via online and mobile channels will remain challenging, and there will be high return rates associated with these areas. This is still several years away, but regardless a seamless and frictionless returns policy has to be the norm.

Chris Buecker
BrainTrust

Online returns are cost killers. In the future, we will see that e-tailers will ban shoppers with a certain return rate or above. Free shipping will remain a weapon for e-tailers.

Phil Rubin
BrainTrust
1 year 3 months ago

There is nothing wrong with returning merchandise, especially apparel, when bought online. That said, there is always a small percentage of customers who abuse return policies much as they game loyalty programs and pursue fraudulent activity (basically a form of shoplifting) in general. The good news is that it’s increasingly easy — and fun — to develop models to identify such bad apples.

Perhaps the motive behind this issue is that the study was sponsored by a commercial real estate firm?

Charles Dimov
Guest

I haven’t seen any empirical research (non-opinion based), to suggest that it is a small minority of rampant returners who are skewing the figures.

Retailers definitely need to keep an eye on returns and those making the returns. If chronic returners are identified, you should have the option of banning these individuals. Retailers cannot be expected to have policies that can completely erode their profitability. Plus, removing a few abusers may ensure you don’t have to take returns policy actions against your entire customer base. Something to think about.

Georganne Bender
BrainTrust

Returns are going to happen when you order online. It’s a leap of faith really. You don’t know what you ordered will actually look like or how the fabric will feel. Will it be what you expected? There is no standard for apparel sizing, so consumers are likely to order several sizes and keep the one that fits. I know I do.

Retailers encourage returns with 30-day unconditional return policies and then punish shoppers when they return too many items. Click around the community forums on TV shopping networks websites to read comments from horrified shoppers who are afraid they could be banned.

All the media noise about the small percentage of chronic returners reminds me of retailers who lock up entire categories of product because of a small percentage of theft. All this does is encourage consumers not to buy.

Lyle Bunn (Ph.D. Hon)
Guest

Can we blame consumers for devising their own methods of beating the system when they have been inspired to buy based on misinformation? Hats off to retailers who try to make things rights. Given the amount of information collected about customer purchase and return history, it does not seem unreasonable that a restocking fee should be applied to customers who take unfair advantage.

Paula Rosenblum
BrainTrust

But how do we define “unfair?” Beyond wearing a dress to a party and returning it (yes, that happens), it all seems like fair game. Would we limit the number of items a shopper can take into a fitting room during a visit?

Shelley E. Kohan
BrainTrust

The high returns rates, in many cases, are driven by chronic returners. But in any online business there needs to be a process for hassle-free returns. In a survey by comScore and UPS, 63 percent of American consumers check the return policy before making a purchase and 48 percent would shop more with retailers that offer hassle-free returns. Based on this data, changing the return policy to become more strict would only drive away potential customers. Additionally, customers who received free shipping on returns increased their purchases over the next two years by 58 to 357 percent (Journal of Marketing). The direction companies should take is banning the most chronic returners which can be done through today’s technological advances by tracking customers’ returns through all purchasing channels.

Jeff Sward
BrainTrust

I think it comes down to knowns and unknowns. CPG products have lots of built-in knowns. You know exactly what they are and how you are going to use them. Apparel items have lots of built-in unknowns, like fit, weight and hand-feel. Buy a brand you know well and the odds of not returning the item improve. Experiment and buy a new brand and who knows. Yes each retailer and each category has to figure out the model that works for them. But abusers of the business should not have to be tolerated, whether it’s in brick-and-mortar stores or on the internet.

Cynthia Holcomb
BrainTrust

These polls cover a swath of products. It is harder to justify keeping a pair of shoes or a dress that does not fit versus keeping shampoo or tools you don’t like. There will always be abusers of return policies. Yet all returns are not equal. For instance, apparel is very difficult to purchase online, devoid of any sensory cues, hence high return rates due to individual preferences not being met (the customer did not like the fabric, the piece fit too tight, etc.). Whereas other products are purchased based on specs. Bottom line, circular-return retail is expensive back-and-forth to the DC. Retailers should not penalize all customers based on return policy abusers. To grow an online business of products purchased based on human emotion and individual sensory preferences requires one return policy. To grow an online business of products purchased based on specs requires another type of return policy.

We are in a new era: Return Policy 2.0.

Shep Hyken
BrainTrust

Honest customers should not be punished for the sins of a few. Not that long ago this topic came up when Amazon (and other retailers) informed customers that they would not be doing business with them due to frequent returns. That’s one way to handle it. Making it harder for everyone to do business is not fair to the honest customers (just about all of them) who play fairly. All that said, online retailers use their easy return policies as an incentive to do business with them. So be careful with the policies you create for these chronic returners. They can impact all of your customers in a way that could cost you sales.

Adrian Weidmann
BrainTrust

Returns, especially in apparel, are simply part of the reality of being digital. I’m with Paula; buying online and free shipping is the new fitting room. While I advocate for new technology to enable value for the digitally-empowered shopper, free-shipping and returns enable and empower apparel shoppers. Period. To suggest that shoppers should be punished in some manner completely misses the value proposition. The question that should be asked is, “how much product would never have been purchased without free shipping and returns?”

Mel Kleiman
BrainTrust

If you can identify the customers who abuse your system and also identify whether it is profitable to do business with them, there is no reason that you can not refuse to sell to them. It is your call on who you sell to.

Ralph Jacobson
BrainTrust

Quite simply, the more liberal and stress-free your return policy, the more policy abuse you’ll get from your customers. You decide what it’s worth, and use real analytics to help that decision, not your gut.

Craig Sundstrom
Guest

I don’t think anyone would be surprised by this — it’s been said on RW often enough — but personally, I’m surprised by the 9% figure. It’s higher than I would have expected (though of course, how the question was phrased determined how many people got put into the “worst” category). But really the bigger issue isn’t how big the number is, it’s how well companies can identify these people. Without an effective method, you’ll either alienate a large percentage of your (good) customer base, or continue to suffer abuse.

Rich Kizer
BrainTrust

This just cannot be a surprise. When we created the technology to transfer the in-store fitting rooms to the home bedroom, there has to be a return increase. In my many years in the department stores business, I rarely watched only a single item venture into the fitting room. There will always be some abuse where some type of action must be taken, but this issue, as a whole, will not go away.

Kai Clarke
BrainTrust

High return rates should be an expected part of the online model. Any smart retailer should build these costs into their model, as should any supplier who supplies these products. The free return, or easy shipping policies should not be affected. They are not the culprits and their presence is what allows the online ecommerce industry to thrive and grow.

Likewise, banning consumers is a poor perspective and one that any smart business would eschew. Instead, better business models, perhaps with a lower price for customers who pledge not to return the product, compared to one that offers a full price for a full return policy. The airlines did this to offer super discounted seats and it works well. Online is still morphing into what it may look like in the near future, and easy freight and returns should be part of this.

Min-Jee Hwang
Guest

It makes sense that only a small amount of chronic returners are driving up rates of online returns. 79 percent of the survey participants said that they “hardly ever regret” making an online purchase and a majority of the participants rarely return their online purchases. This makes it evident that most consumers are not taking advantage of the liberal return policies retailers offer. The implementation of free shipping policies and the bans on customers who frequently return online items seems justified. It’s unfair to the retailer if a small group of picky shoppers are increasing their return rates to 20 percent of overall sales.

wpDiscuz
Braintrust
"High return rates are a fact of DTC life."
"As the saying goes, “it’s the price of doing business” whether online or in-store."
"Can we blame consumers for devising their own methods of beating the system when they have been inspired to buy based on misinformation?"

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