ASOS gambles with returns policy but will other retailers follow suit?

The COVID-19 pandemic has set a new baseline for e-commerce in Australia, with online predicted to hold a 15% share of the retail market by the end of 2020.

Christmas and New Year have swiftly come and gone within the blink of an eye. However, the real impact of the festive period is only just about to hit retailers. Today, January 2, dubbed ‘National Returns Day’ is expected to be the busiest day of the year for holiday returns. This year is expected to be the busiest yet. UPS has estimated it will handle a record 1.9m returns to the US this year, increasing 26% in comparison to 2019. Given the growth in e-commerce, it is likely that this figure will continue to grow in the coming years. These figures should come as no surprise, a survey of 15,800 consumers conducted by Oracle, an online retail platform, revealed 77% of consumers plan to return some of their gifts and approximately 20% expect to return more than half.

Consumer behaviour is changing, partly due to the rise in e-commerce. e-commerce has made it easy for consumers to be indecisive without having to shoulder any financial burden so much so that consumers bedrooms have now become dressing rooms. The returns process is now more convenient. Consumers no longer need to go back into a store to request a refund instead they can repackage the items and post them back often at no additional expense. Arguably the more convenient returns process has removed some of the shame and embarrassment associated with returning an item. Consumers no longer need to explain their reasons for returning an item and as a result the risk of being caught returning a worn or damaged item is significantly reduced.

Research conducted by resource planning platform Brightpearl revealed that more than a third of UK retailers have seen an increase in serial returners over the last year. Statista has estimated that return deliveries alone will cost $550bn by the end of 2020, not including labour disposition costs. It is unsurprising then that retailers have started to recognise that free and easy returns are causing significant damage to their profits. Many consumers have stated that they frequently have to return online orders because the sizing was wrong or difficult to judge. As a result, companies have implemented proactive policies including try before you buy initiatives i.e. ‘fit assistant’ and ‘style match’ to curb returns. Although these measures may help to deter some shoppers from purchasing and returning multiple items in sizes excessive returns remain an issue for many brands.

Returns are costing UK retailers £60bn annually and an increasing number are caused by shoppers ‘wardrobing’: wearing or using items once and returning them. Approximately one-third of this comes from online returns. This problematic trend has been exacerbated by social media and a slowing economy. 9% of shoppers who participated in Brightpearl’s survey revealed that they have ordered an item just to take a picture for social media and then return it. As a result, online companies have implemented stricter returns policies in hopes to deter ‘wardrobers’ and reduce the impact on profits. One strategy has been to put tags and labels in irksome places preventing customers from wearing the item without the label on show. Some online brands are becoming more evasive in their tactics and are discouraging returns altogether removing free returns or not providing a return slip with the order. Whilst others, such as Amazon and ASOS, have taken a more extreme approach by placing lifetime bans on serial returners meaning preventing them from making future purchases.

Considering the increasing cost of returns it is surprising that it has taken so long for retailers to introduce such policies. However, the idea that “the customer is always right” has made it difficult for retailers in the past to take a firm stance against serial returners. Customer loyalty is increasingly important for brands particularly in an era where customers are more disloyal than previous generations. Blacklisting customers may be too much of a gamble for some smaller companies who rely on serial returners. After all serial returners also tend to be serial spenders in most cases, so retailers need to be cautious blacklisting some customers. Highly restrictive returns policies can tarnish a brand’s reputation and customers may be reluctant to shop with that brand unsure of what retailers define as ‘excessive returning’.

Will other companies follow suit and begin to blacklist serial returners? It looks as if this may soon become reality, given 45% of retailers are already considering blacklisting serial returners and ‘wardrobers’. It’s clear that retailers have needed to tackle excessive returns for a while however, only time and ASOS’s profits will tell if these extreme measures are worth it.

Source: Transport Intelligence, January 2, 2020

Author: Beth Poole