That’s huge and a massive hit for the profitability of these stores, but as the article highlights, with free shipping and free return shipping, there are a lot of people who order clothes in multiple sizes with the intention of returning all but the ones that fit best or even ordering clothes to wear once and then return.
The latter I call the “prom dress syndrome” and while my daughter hasn’t done it, I am aware of other families that use that sort of approach for an expensive purchase. It’s “use once and return” and in my eyes, it’s fraud because the business then has to either lie to the next customer and say it’s new, or sell it as used and write off the cost of the product markdown.
I was just at Bed, Bath and Beyond to buy new bed sheets and the set I bought was $159.99 marked down to $59.99 on clearance. Who knows, perhaps someone bought them, put them on their bed, and decided they didn’t like the color. Or the feel of the fabric. Hmm… might be time to go wash them before I put them on my own bed, yes?
For online retail, though, shipping is a significant additional cost and when you add the casual fraud of too many customers who buy a bracketing set of sizes rather than candidly assess their own current physical state, or do the same with their families, it’s a really big problem.
Fortunately there are some smart retailers who are mining their data to identify these habitual returners and slow things down. The WSJ highlights Rue La La, Modnique, and The Gap, all clothing shops (because clothes that don’t fit is the #1 reason for returns across the board), but it’s a problem for every online retailer, and a tricky balance to figure out how to encourage impulse purchases, knowing that most customers will keep something once they try it or try it on, and discouraging lazy or fraudulent customers who have no intention of keeping anything, they just want to play for a day, a week, a party or a special occasion.
It would be an interesting experiment to assign a “quota” of returns to each new customer and offer a reward for them being savvy online shoppers and not returning what they purchase over time. Better discounts? Lower shipping costs? Both make sense. And those customers who do become problematic with returns might find that they’re paying 10%, 20% or more in shipping surcharges against their transactional history. It’d serve as a “returnaholic tax” and would ensure that the good citizens aren’t left funding the extra return costs of the minority.
The article outlines some other smart solutions, but what do you think? If you’re running an online store, how do you try to minimize returns and identify those people who are most likely to be chronic returners?