![\"Retail](\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png\")
<\/a><\/p>\n
![](\"https:\/\/www.mytotalretail.com\/wp-content\/uploads\/sites\/14\/2024\/06\/GettyImages-1351029352.jpg\")
<\/p>\nIn November, REI reached out to 4,800 people with an email to let them know they would never be able to make another return due to past abuse. Other brands including Saks Fifth Avenue and Target have updated their policies to refuse returns and send items back if they suspect fraud or if a product appears used. More brands are shortening return windows and charging for returns that used to be free.<\/p>\n
Brands are trying to make smart business decisions as they face an estimated\u00a0$160 billion in holiday returns. They\u2019re analyzing customer behavior to reduce fraud and e-commerce abuse, and they\u2019re doing the math on margins to make sure that they don\u2019t lose money on things like free shipping. New insights are leading to stricter policies and some creativity. In some cases where the cost of the return outweighs the benefit of getting the item back on the shelf, brands are asking customers to keep products they don\u2019t want and refund them anyway.<\/p>\n
These accounting-led exercises are smart, but brands also need to weigh the longer term effects on their customers. They need to have positive relationships with everyone from loyal buyers to people who want to return a gift that they got from someone else. Having the right tech and data in place can help brands get returns right; they can communicate product details and returns policies effectively, personalize experiences for each customer, and innovate to improve the very concept of returns.<\/p>\n
Understanding the Return on Returns<\/h2>\n
Returns are a costly hassle for companies, and are the\u00a0least favorite part of online shopping for two-thirds of customers. Throw gift-giving into the mix, and returning items becomes even worse. Brands are smart for evaluating the margin on returns and on customers with high return rates. They\u2019re also smart for weeding out fraud. REI has millions of customers each year, so blocking a few thousand of the worst offenders shouldn\u2019t be a big deal \u2014 as long as everyone else still feels loved.<\/p>\n
Retailers grappling with returns problems should evaluate how their bottom line and their customer relationships are affected by the following and build these insights into their marketing strategy:<\/p>\n
- \n
- Fraud:<\/strong> Every company deals with different kinds of fraud and it\u2019s important to find out what kind of fraud is costing the most and how rampant it is. Brands also need to determine how to deal with fraud so that it doesn\u2019t hurt their relationship with their wider customer base. Luxury retailers typically stand more to lose from a single fraudulent purchase or bad customer than a big-box retailer like Walmart. However, being overly strict with refusing even a few returns could turn away a loyal customer who never comes back. Communication is key.<\/li>\n
- Return Policies:<\/strong> One reason REI made headlines for its fraud prevention is that it has a famously generous 365-day return window. While that window still stands for most customers, REI does have a bigger return headache to deal with than a company with a short window. Products can\u2019t always be put back on shelves if the SKU is no longer being sold. Everyone should know what policy applies to them and their purchase.<\/li>\n
- Shipping Costs:<\/strong> Some companies offer free returns to everyone, while others use free returns as a perk for loyalty members or big purchases. Charging for returns could stop someone from buying in the first place, or it could turn an originally happy customer into an angry one if they didn\u2019t realize they would be charged on the back end.<\/li>\n<\/ul>\n
Balancing Behavior and the Bottom Line<\/h2>\n
There\u2019s some good technology on the shelf to help brands thread the needle with returns \u2014 increasing margins while keeping most customers happy. Loyal customers buying for themselves or first-time gift-givers and recipients should all get a return experience that makes them want to come back, even if they need to get charged or missed the window.<\/p>\n
Marketing automation can help brands identify more shoppers throughout the buying and returns season so they can create more accurate returns experiences for every type of customer. New technologies can be incorporated to deliver specialized returns processes based on customer profiles and preferences. For example, LoopReturn promises to create a \u201ctop notch\u201d return experience that justifies a small fee that is communicated up front. Using the right data and key performance indicators is also important. Brands need more than return margins per purchase. Using metrics such as lifetime customer value (LCV) will help brands keep growing up and to the right in 2025.<\/p>\n
Brands can create a more nuanced and personalized return experience based on customer behavior. Marketing automation tools help marketers deliver customized offers and experiences based on key metrics like LCV or loyalty tier using real-time on-site data. Brands can also design shopping experiences that lead to fewer returns using AI, images and fit guides. Providing accurate pictures with models of different sizes or items placed in a room so their size and shape can be better understood helps people know what they’re getting.<\/p>\n
In preparation for next return season, brands can reduce return rates before items are ever purchased. A\u00a0study from MIT found that predictive models can be used to reduce total returns. Some items like dresses have very high return rates, as do darker items where the true color is hard to see online. Using machine learning, retailers can analyze images of products and predict potential return rates. One retailer in Germany pulled a small percentage of high-return-risk items from its online store and saw significant reductions in return rates.<\/p>\n
Returns may never be a retailer\u2019s or a customer\u2019s favorite part of online shopping, but a lot of smart thinking is going into making it better for both parties. For the first time, retailers have a lot of options to improve nearly every part of the shopping experience, from before a product ever hits the virtual shelf to the email someone gets back thanking them for completing a return.<\/p>\n
Jon<\/span>athan\u00a0Sherry<\/span>\u00a0is founder and CEO of Alium, an intelligence platform that helps buyers and sellers of marketing and e-commerce solutions make smarter decisions.<\/em><\/p>\n<\/div>\n
- Return Policies:<\/strong> One reason REI made headlines for its fraud prevention is that it has a famously generous 365-day return window. While that window still stands for most customers, REI does have a bigger return headache to deal with than a company with a short window. Products can\u2019t always be put back on shelves if the SKU is no longer being sold. Everyone should know what policy applies to them and their purchase.<\/li>\n