The cost of returns

If you own or operate a warehouse or retail e-commerce site, one of the key factors that can significantly impact your profitability is the return rate of the products that you store and distribute. A high return rate can result in several negative consequences, ultimately hurting your bottom line.

According to a The Times investigation, online fashion purchases are being returned at twice the rate of in-store clothing, with one in three items being returned. Although the return process is typically free for consumers, retailers are paying an average cost of £20 per item. This results in a 30 per cent loss in profits, costing UK retailers £7 billion annually, and ultimately leading to higher prices for shoppers. Highlighting returns is a growing and costly problem for e-commerce businesses.

The impact of Return Fraud

Return fraud refers to the act of returning items to a store for a refund or exchange using deceptive or dishonest means. This type of fraud can take various forms, such as returning used or damaged items, stolen goods, empty mailing bags, or even claiming the items never arrived. Return fraud not only causes financial losses for retailers but can also result in higher prices for honest customers. Therefore, all e-commerce businesses need a strategy to deter and prevent these incidents from happening.

How to combat Return Fraud

There are several strategies that retailers can use to combat return fraud and protect their businesses from losses. One of the most effective measures is to implement a strict return policy that clearly outlines the conditions for returning items, such as requiring a receipt, limiting the time frame for returns, and restricting the number of returns per customer. This can deter fraudsters from attempting to return stolen or damaged goods, as they are less likely to receive a refund.

Another approach is to improve the quality of customer service by training staff to recognise and prevent return fraud. This can involve educating employees on common scams and fraudulent tactics used by fraudsters, as well as providing them with tools to verify the authenticity of claims.

Retailers can also partner with law enforcement agencies and industry associations to share information and collaborate on investigations into return fraud. By working together, retailers can create a united front against fraudsters and raise awareness of known return scams.

Retailers can also use technology to detect fraudulent returns. This can include software that tracks and analyses return patterns, such as the frequency and value of returns made by a customer, to identify potential cases of fraud. Advanced analytics and artificial intelligence can also be used to flag suspicious returns that may require further investigation. Transaction checker technology can also investigate incidents of fraud by simply using a Transaction ID and giving you the evidence to fight these claims.

Implementing a Transaction Checker

The Transaction Checker helped Footasylum, a Sportswear retailer in the UK to reduce the number of missing items reported from delivery by over 50%. When using a Transaction Checker, e-commerce retailers can have video evidence of disputes related to missing items. This technology provides a visual record of the order picking and packing process, ensuring that there is proof of any mistakes or false claims made by customers.

By having this evidence, e-commerce businesses can more easily investigate return fraud incidents and provide superior customer service to those with genuine complaints. By detecting patterns in claims and identifying discrepancies, businesses can identify potential fraudsters and take appropriate action to prevent future incidents. This proactive approach can save e-commerce businesses time and money, while also improving the customer experience.

In conclusion, minimising the impact of false return claims on your e-commerce profits requires a multifaceted approach that includes implementing strict return policies, using technology to detect fraudulent returns, improving customer service, and partnering with industry associations. Implementing a Transaction Checker can also simplify the returns process and increase the profitability of returns. By taking proactive measures to prevent return fraud, retailers can reduce their losses and maintain their profitability, ultimately leading to better prices and experiences for their honest customers.