Fraudulent product returns – a lot of fuss about nothing?

Is there any truth in the worry about growing return rates?

Well, the Christmas time. While other people’s hearts beat faster thinking of candle light and gingerbread, lines of worry occur in the faces of most of the online retailers. They already think about the time after the large festivity: when everything is being sent back. For free, of course, because after all the consumer is the boss.

Year after year, the calls for stricter regulations concerning the avoidance of fraudulent returns resonate. However, how much fraud is behind the return? How big are the shares of justified and abusive returns and what can people who run stores do to reduce the amount of the unloved returns? According to a study of the ECC Cologne the cross-sector share of returns that were planned by the customers only has 7,3%. That’s the fly in the ointment: returns do not play an immense role regarding all branches but in the sector of clothing average 19% of the returns have already been planned while ordering. However, those 19% can hardly be declared to be abuse because most customers only return cloths and shoes if they do not fir or appeal.

According to §355, Abs 2 BGB the online customer is granted a cancellation right lasting 14 days without the need to give any reasons. Several online stores even extend that respite voluntarily. Thus, the swedes from H&M grant 28 days, zalando 100 days and amazon even grants miserable presentees during the Christmas season time to return till the end of January 2014.

Thus far, thus practical for the customer. It is also an advantage for the online retailer because without that possibility clothes could not be sold as well as they are. Nevertheless, the return costs are still a problem for retailers because they will probably still be payed by them when the new EU consumer right regulation have become law. The average costs of a return are 7,93€, facing a return quota of 19% that is a factor that can not be ignored.

Thus, what is one supposed to do against too many returns?

Let’s start with the “ordinary”, justified returns. If one wanted to decrease them the customer should be given the possibility to get an idea of the offered product that is as exact as possible. On the one hand, that us about visual representations such as photos taken from different perspectives, exact display of the colours, a good zoom function form different perspectives and videos. There are even proceedings concerning the virtual trying on. On the other hand, the matching descriptive texts have to contribute to the informing as well. Here, exact statements concerning sizes and scales are the most important factor. Many shops have to catch up on improving those mentioned features. There are often lots of photos but the texts are often sparse and less concrete. At that, accurate information about the fitting of clothes is crucial for the customer to assess how the clothes might look being worn. Another important point are the ratings of other customers that have already bought a certain good. Consequently, customers can profit from the experiences of others concerning material and wear qualities.

To clamp down on abusive returns other guns are to be brought. It is mainly about customers that order goods such as cloth or electronic devices, use them and finally send them back within the 14 day respite. The ideas oh how to deter people range from “black lists” to additional return costs and the limitation of the payment options right up to banned customer accounts. Even the usage of a chip that detects suspiciously long times of wearing by measuring the body temperature being integrated in the cloths has been considered.

Penalties are not an appropriate solution

But the people who run stores do not even have to go as far as “punishing” their customers for returning their goods. Besides the customer-friendly polishing of the store putting measures in place to inform the customer about the consequences of returned products can help. Thus, one can appeal to the customer’s environmental awareness by giving information. For multichannel retailers the incorporation of (offline) stores into the logistic processes is a practical and customer-friendly alternative to the mail. Here, the advantage multichannel-retailers have over their pure-online colleagues shows up again.

Fact is: The online trade concerning clothes and shoes would not work without returns. The human body has its own individual measures and the industry does not use unified measures either. Usually, it is necessary to try different variations to find fitting trousers, dresses and shoes. If the practices of the steady trade are supposed to work for the ecommerce as well returns have to be accepted as normal. Top of the class online retailer zalando has to cope with a return quota of 50% and more, but acts charitable. The possibility of sending back articles that do not fit rank among the standard services of the online store. The fitting rooms are “relocated to the living room”.

Eventually, the stores are forced to add the increased return costs to the product prices. That certainly tightens the price fight in the ecommerce crucially. In order to keep one’s own margin stable and not to lose own market strength observing the competitors is more important than it has ever been – especially in the ecommerce.

Read here, which alterations are in store for the ecommerce in 2014.

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