There's a lot of information out there that can help you optimise your fashion retail business, but there's a limited amount of information out there that helps you tackle all of the system abuse and loss-making customers.
More specifically, customers abusing your return policies.
Return rates for e-commerce fluctuate between 20-30% depending on the season.
Today, majority of the customers expect to have a free returns solution in place for them to be able to commit to a purchase.
Having a lenient returns policy can be a double-edged sword meaning that it could help customers convert their baskets into a purchase, knowing that they could easily return an item back if it's not right, or it could cut through your profits due to customers taking advantage.
Free Outfit Rental.
There's a trend that's been growing ever since I first got involved in retail and it cut into my store's profitability, it's called "wardrobing".
Wardrobing is fraudulent trend which is associated with both e-commerce and brick-and-mortar returns. Basically it means that a customer will take advantage of your trust by making the purchase, wearing the item for a one night or day, clean them up, re-tag them and come back to you with puppy-dog eyes with zero intentions of keeping the products. This means that they could potentially get away with wearing a different outfit every day — WITHOUT EVER PAYING FOR IT!!!
Rent Or Sell.
Now, you could consider a low cost option for them to actually rent the products but you don't want the hassle of cleaning, insuring (if it's worth it), booking in times for customer usage, deal with lateness, etc. I could go on. You're a retailer. You want to sell your stock without the burden of it hanging round too long. So how could you use returns to your advantage?
Now, legally, the consumer has a right to a refund if the product if it's been bought online as this is called distance selling. They have a 14 day cooling off period to cancel the sale and get a refund, so make sure you've got at least the minimum legal requirements in place.
After the 14 days, it's up to you if you want to extend that. The most common is 28 day.
Facilitating The Return.
Ok, so the customer has requested a refund. How do they get the product back to you? There's several options to consider. You could send your customers a pre-paid returns label with every sale — this means you have to consider the cost of labels and the service (choose your logistics partner wisely) or you could give them the option to either come into your store or to have the items collected the items on request (it's up to you if you want to forward the cost on to customer or absorb it yourself) by partnering up with an on-demand retail logistics company as part of your omni-channel strategy.
Late last year in 2018, it was reported by The Wall Street Journal that Amazon had been closing accounts that made "too many returns". They also released Amazon Wardrobe to allow online shoppers to try the products on in the comfort of their own home without committing to the purchase until they're happy. Once the customer has selected items they want to keep they would send back the rest and they'll be charged for the items they kept.
From all of the information that I've presented, hopefully, you're able to make your mind up about how you should structure your returns policies. So just to recap, legally you have to give online consumers 14 days to get a refund, it's up to you how lenient you are by extending that as a gesture of good will. To prevent Wardrobers, you can't deny them of their legal right but if you have control of their account you can deny them of being a customer again, because let's face it, they're not making you any money.
So far, blacklisting best method of prevention I've seen but I'm interested to know if you have one in place that works better or if there's any out there that you think work really well. Just get in touch with me!
But for the genuine returns, make sure to implement just as a magical experience as the delivery process. Give your customers the flexibility of coming into the store or having the items delivered back to your store. Keep your customers happy and they will keep you happier!
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Until next time.