Fraudulent Return Facts:
- Returns from online fashion purchases will have an impact of £6.6 billion for UK retailers
- U.S. loss from annual merchandise return fraud is estimated at $17.6 billion
- 55% of UK fashion and clothing brands would consider ‘banning serial returners’
- Millennials (aged 25-34) are the worst culprits for wardrobing with 21% confessing to buying with the intention of sending back, closely followed by Generation Z (aged 18-24) at 19%
- Of those who have admitted to wardrobing, 55.6% of men had done so more than once in the last 18 months, compared to just 31.3% of women
- 69.5% of the 200 retailers surveyed believed that wardrobing was common
Due to ‘serial’ returners, many retailers are re-examining their returns policy, especially as online sales and consumer returns continue to rise. As e-commerce is taking over traditional brick and mortar sales, retailers are developing new strategies to retain and gain customers through loyalty and trust. Over the past few years, through efforts to gain customer loyalty, retailers appealed to customer wants—free shipping, low prices, no-hassle returns. As a result, retailers followed in Amazon and Wal-Mart’s footsteps and created extremely lenient return and shipping policies. While the majority of consumers practice good faith and only return items that are genuinely broken, there are enough ‘serial’ returners that abuse the system and return maybe three out of every five items they buy. This article summarizes a recent report that explored fraudulent returns and the impact it has on retailers. The report was published by UK-based ReBound and can be found here: A Guide to Returns Fraud.
The Who, How and Why Serial Returns Happen
Millenial men happen to be the worst offenders when it comes to fraudulent returns through wardrobing; although, according to the report, the reasons are unclear as to why (55.6% of men admitted to wardrobing compared to women at 31.3%). What is clear, is that the most prevalent form of returns fraud is wardrobing—the practice of buying clothing for the purpose of wearing it once and then returning the item(s). For some, that might be an expensive suit or dress to wear to a wedding or other special event, and then returning it after the credit card bill arrives. Many times, clothing will be returned with make up stains or spilled food and drink; indicating that the items were worn at least once.
For the survey, 21% of Millennials (aged 25-34) admitted to sending back worn items of clothing, closely followed by Generation Z (aged 18-24) at 19%. The reasons range from being able to keep up with fast fashion on a limited budget to staying relevant on social media. Apparently, the snap-and-send-back trend is going strong—where young people will buy expensive clothes, pose for Instagram or Pinterest, throw in the hashtag du jour and then return the clothes only to repeat the process again.
Serial Returners Might be Your Best Customer
A simple, knee-jerk reaction to serial returners could be to set up a strict process in which a customer could be banned for returning so many items over a set period of time. However, in the long run that could hurt retailers. Further study on fraudulent returns indicate that the worst serial returners might also be a retailer’s best customer. The report shows that it is common for a shopper who has wardrobed five items might have also ordered (and kept) 30 items over the last year. For some retailers, absorbing the cost of the five returned items is well worth it considering the 30 items that were kept. For this reason, retailers are not implementing strict rules, but are instead publishing ‘fun’ returns policies that indicate the retailer does care about the customer satisfaction.
The report highlighted a returns policy by Boden, that states: “You can still return anything that does not meet your naturally high quality expectations (things like wear and tear are included, though garments that have been mauled by pets, drawn on by nephews, worn while decorating and so forth, don’t qualify).”
Reducing Costs and Increasing Recovery Rates
For retailers, the ability to reduce costs and recover from the impact of returns is paramount; especially in a world where consumers expect free shipping. This is where a company like B-Stock comes in to play. B-Stock is the world’s largest B2B marketplace for returned and excess goods. Our platform directly connects inventory from major retailers to resellers who own clearance and liquidation stores.
B-Stock creates private marketplaces for retailers to auction their returned and excess inventory to recover from the costs of shipping, processing and warehousing product that can’t be resold as new. This technology-driven approach will increase recovery rates on consumer returns and will keep warehouse inventory moving.
We invite you to review our case studies and our suite of private marketplaces that we operate for 9 of the top 10 U.S. retailers, including hundreds more in the U.S. and internationally across Europe.