Sure, liberal return policies are important. Customers become more willing to buy when they know they can receive a refund or exchange if things don’t work out. But the shopper who intends to return the merchandise is committing fraud on you. Some retailing consultants call the practice “serial returning.” Consumer behavior researchers at Northern Illinois University, University of Tampa, and University of Texas-Tyler call it URD for “unethical retail disposition.”
The researchers were struck by the large number of excuses people give themselves to justify the practice and by the fragility of the reasons people give themselves for refraining from serial returning. A significant percentage of shoppers can be easily convinced to do it and experience little, if any, guilt.
The research findings also lead to suggestions for you to reduce the extent of URD:
- Be a part of the community in which you do business. This is more challenging for solely ecommerce retailers and large retail chains than for the locally-based store. But it can be done by all retailers, and it’s important. URD is more common when shoppers consider the retailer to be an outsider. Rates were especially high at stores owned and operated by members of ethnic minorities selling to members of another ethnic minority in a community in which the owner/operator did not themselves live.
- Explain pricing and merchandising decisions to customers. The Illinois/Tampa/Texas researchers believe that at the base of URD is mistrust of the retailer’s intentions in pricing and merchandising.
- When someone makes a return, ask them to tell you the reasons, and then record those reasons along with the person's identification information. Never make this procedure a prolonged inquisition, and always have in mind that it is more important to keep a customer than to keep to a policy. But your request should be more than the formality of checking a box for the category of reason. It should be a brief interview. As word gets around that you do this, the dishonest consumers become more likely to decide to take their business elsewhere. And that's fine with you, since their business is fraud.
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Interesting post Bruce. I wonder how much URD is really a problem for ecommerce only retailers. Our experience has taught us that 'risk reversal' policies are critically important to persuade consumers to buy online. In our case we offer 100% satisfaction guarantees, and full product refunds. We post this information in our footer of every page, and in the closing paragraphs of our order form, where we (A)explain that while we refund the cost of the doll, we do not refund the shipping charges - having already spent that to send them their package, and (B) they can return the doll even if it 'has been ripped out of the packaging and played with.'
ReplyDeleteNow the problem is we don't know if our return rate is infinitesimal because of our policy of not refunding the shipping, or because once you give a doll to a child it is practically impossible to take it away? ☺
Another possible reason for the infinitesimal return rate at Pattycake Doll Co. is that you’re selling wonderful products.
ReplyDeleteI do agree, though, that once a child hugs their doll and gives it a name, any interest in returning the doll fades as fast as would that for taking even a naughty new puppy back to the animal shelter.
As a comparison, Zappos has said that 35% of their online purchases are returned and some customers end up returning 50% of the items they order. Zappos loudly announces how they pay for the return shipping, considering this a way to reduce the perceived risk for shoppers who are thinking about trying out more expensive items than they’d otherwise purchase.
Considering how low your current return rate is, it might be worthwhile implementing and tracking results for a “we even pay the return postage” on some premium-priced items. I suggest that you’d want to set a time limit on the trial and carefully delineate the items for which you’re doing this, such as by saying something like, “These are newly introduced premium dolls we want to especially encourage you to invite into your household.” The Zappos experience indicates that shoppers will spend more because of this further risk reduction. Your own experience with the current line of dolls indicates that once invited into the home, the premium-priced dolls will take up permanent residence.