Serial returners are making headlines as they are being banned from Amazon, and other major US and UK stores are set to follow this policy.
Compared to retailers in Asia, retailers in the US and the UK have generous returns and refunds policy for items purchased, and a growing number of these customers have taken advantage of such returns policy.
While not all customers who returned their items purchased are banned, the focus is on ‘serial returners’ – customers who often buy items and return them, either as frequent returns or as bulk returns.
Is banning customers a good idea to begin with?
60% of US and 45% of UK retailers are considering to impose a lifetime ban on serial returners.
Retailers have taken customer returns as a serious concern given that they stand to lose a lot of money. It is estimated that US retailers lost USD$351 billion in sales in 2017 to items returned which account for 10% of total sales. A further 6% of those returned were considered fraudulent returns. For the holiday season, customer returns were at a high of 28% of total sales.
Does Singapore Face The Same Problem?
Online shopping experience has left out core experiences from shopping: the ability to touch and, try out the items before purchasing. As such, it’s not a surprise to find product returns are higher for e-commerce: 20% of all sales, which is doubled from brick and mortar stores.
The Singapore e-commerce market is among the highest in terms of dollar value compared to its ASEAN neighbours, at SGD$91 which correlates to the fact that it has the highest GDP in the region.
Interestingly, according to another study by iPrice, Singaporeans e-commerce shoppers show the highest dissatisfaction compared to its neighbours, at a high of 34.7%.
Among the ASEAN online shoppers, Singaporeans have the highest refund request.at 29%. This is 9% higher than the average returns for e-commerce.
So How Can Retailers in Singapore Take Charge To Tackle This Revealing Issue?
We’ve identified five steps retailers, including online retailers, can do to prevent or just contain this issue.
1. Track your customers and numbers of returns
Consider updating your order management systems (OMS) to take into account customer returns.
All robust order systems have this in place. If not, record the names and items of the customers and their returns. Make sure to check them against the list for future returns, or for online sellers, to check against their names prior to accepting their orders.
2. Have a clear return or refund policy [restrict]
While most retailers in Singapore do not provide generous returns or refund policies, retailers still need to outline their policy clearly to customers. Consider having the policy notice above the cashier till, or at the bottom of the your e-commerce website page.
For omnichannel stores (with both online and physical shops), you may encourage or allow only in-store returns. This is known as BORIS (buy online, return in store) which gives retailers the opportunity to upsell other items to customers. 66% of customers returning items with the BORIS policy have purchased other items in store.
3. Make sure product descriptions are accurate
This is applicable for online retailers.
Women’s wear and footwear items have the biggest customer returns rate compared to other segments.
Consider having detailed sizing, photographs, and descriptions of materials. This is to circumvent customers who might argue that the size didn’t fit, or the colour wasn’t right.
4. Consider banning serial returners from your store
Prior to banning your customers from buying from you, consider giving them a fair warning if they have returned items more than once. This can be done with a warning that they will soon violate the shop’s return policy, and which may lead to an outright ban, if they continue.
If the above fails to minimise the issue of serial returners in your store, then you may need to consider simply banning certain customers.
5. View returners as an opportunity to increase your sales
For customers who return items for valid reasons, view this as an opportunity to gain loyal customers.
Firstly, you have to determine if they can be considered profitable customers. Offer them a discount on their next purchase, or reward them with a gift in addition to the replacement item. This will win them over to become loyal customers.
With the e-commerce industry blossoming in Singapore, a policy of ‘all goods sold are final’, is no longer enough. Even retailers who operate both physical and online stores need to take note of the returns and refunds policies. Guard your store profits with a good and clear returns policy.
Customer returns or request for refunds are problems that need to be contained with clear in-store policies that are transparent to customers as well.
Be sure to consider these steps to minimize potential loss from returned items, and make use of such situations to get loyal customers as well.