Blocking customers for too many returns is not the solution but neither is ignoring the problem

When it comes to returns management, retailers have a fine balancing act to achieve. They need to make decisions that keep their business profitable; they need to keep customers coming back but also make environmentally responsible choices. In May, Swedish online fashion retailer, Bootz AB, hit the headlines for blocking 42,000 customers. They argued that these customers had returned too many items. Ask Kirkeskov Riis, a spokesperson for the brand, said these customers were taking advantage of “the high service levels of free shipping and returns at the expense of our business, other customers and the environment.” The figures are pretty eye-raising. Less than two percent of the retailer’s customers were responsible for around 25% of the total return volume. These returns were having an environmental – as well as financial – impact. As Kirkeskov Riis stated: “By pausing these accounts and reducing unnecessary returns, Boozt saved approximately 791 tons of CO2 in 2022 which has eliminated the need for approximately 600 delivery trucks during one year.” The decision has caused ripples through the retail sector. Retailers worldwide will now be watching to see what happens next. Will this have ramifications for Bootz AB with its customers? Do customers understand the need to balance customer experience with financial and environmental concerns? Are the generous return policies that customers now expect as standard too generous? These questions need to be addressed and answered. The returns experience is often neglected by businesses. It is viewed as a “cost of doing business” and many just opt for free returns for all as it’s expected. They shoulder the cost, interact minimally and hope for the best. This is a risky strategy. In a survey conducted by YouGov, it was found that 62% of consumers who have had a poor returns experience with an online retailer are unlikely to re-engage. A shift in mindset about the retail returns management is needed. If managed properly, this experience can engage customers and drive more sales. As Michele Marvin, VP of Appriss Retail, says: "The point-of-return is an underutilised customer touchpoint, despite being a pivotal opportunity to preserve shopper satisfaction." The returns process is an opportunity to interact with customers – new or returning. Retailers can identify their needs and preferences using feedback surveys. This data can be used to tailor communications to customers but also be used in wider data analysis about what products are selling and why; what customers like and where there are points of friction in the customer experience. Retailers can also grow sales at this point using tools including offering personalised recommendations for alternative products (upsells and cross-sells). A McKinsey survey found that 76% of consumers said that personalised communications were a crucial factor in getting them to consider a brand. Interestingly, 78% also said this sort of content also encourages them to repurchase. Product reviews also come into play here as they make customers feel listened to and that their opinion is valued. Coupons are one of the easiest tools to implement. These could be a discount on the customer’s next purchase or even a discount to help dissuade them from returning an item. PYMNTS research reported in a survey that even a five percent discount could persuade 39% of customers (who are ready to return an item) to retain it, while a 30% percent discount could persuade almost 59% of such customers. If a customer is intent on returning an item, in-store returns are an option as they might led to more sales. After all, it makes sense to do some browsing if you have made the journey to a store. Tapping into what customers want, retailers should also look at their views on sustainability and determine how they can dissuade returns. A survey conducted by the British Fashion Council found that some 20 million items of returned fashion were sent to landfill or incinerated in the UK last year. This generated 750,000 tonnes of CO₂ emissions in 2022 and represents 75% of the approximately three percent of all returns that cannot be resold. Retailers must be environmentally responsible and this should be reflected in their returns policy. It could also bring in more customers as there is an increasing trend towards consumers being more ethical in their retail and brand choices. A 2022 Deloitte report revealed that there had been a sharp increase in the number of people who have adopted a more sustainable lifestyle in the last 12 months. Amongst these, 40 percent had consciously chosen brands that have environmentally sustainable practices/ values. Buying from a retailer whose stance mirrors their own is important for a rising number of customers. Sustainable practices are a moral imperative but they are also another way to retain loyalty. Bootz AB ended up having to extreme action because its returns management had been neglected. Retailers can avoid being pushed to this if they focus on delivering a stronger post-purchase experience. Clear communication, personalised recommendations, product information and reviews, and rewarding loyalty are amongst the many simple but effective measures retailers can put into place to ensure that their customers’ experience with them is optimised from the minute they engage. Anton Eder is the founder and CoS of parcelLab, the only truly global enterprise post-purchase software provider, enabling brands to increase top-line revenue, decrease operational cost and complexity, and optimise customer experience. Trusted by over 800 brands, parcelLab actively manages the post-purchase experience across 175 countries and tracks shipping data from more than 350 carriers worldwide.