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Generous ‘returns’ policies will hit online retailers this Christmas

By our News Team | 2022

As retailers struggle, they may need to rein in their returns procedures, particularly for ‘serial returners’ and ‘retail borrowers’.

Many online shoppers around the world have become accustomed to free and very lenient return policies from retailers. But new research from Iowa State University in the US says this may change as retailers look to offset rising costs.

Indeed, the researchers say that companies prepared roll out tougher returns policies for customers this festive season will be more economically viable as they will protect themselves from some of the worst customer excesses when it comes to over-shopping.

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Photo by Tima Miroshnichenko from Pexels

According to the study published in the peer-reviewed Journal of Business Research, if consumer habits mirror previous years, 20% to 30% of the merchandise bought during the pre-Christmas buying frenzies will be returned for a full refund.

This, of course, is a big financial hit and logistical challenge for retailers, which also have to cover all the shipping, sorting and processing involved.

“Supply chain managers are really good at moving things to the customer. They’re not as good at bringing things back in because it’s a jumbled, disorganised flow back into the company for a product that they may not be able to resell,” said Robert Overstreet, Assistant Professor of Supply Chain Management at the university.

Stricter policies are being adopted

To slow the backward flow and offset costs, retailers are increasingly adopting stricter return policies. Some are shortening the return window; others are adding processing fees or scrapping free shipping altogether.

The risk with this approach, Overstreet says, is backlash from customers. He points to L.L. Bean as an example. The US-based clothing and outdoor recreation equipment company was, in 2017, ranked 16th in RepTrack’s 100 Most Reputable Companies. But the next year it substantially amended it returns and replacement guarantee, and thereafter dropped out of the Top 100 listing completely.

Overstreet and his co-authors say in the newly published study that consumers are more likely to shop elsewhere if they view a return policy change as unfair or breaking a promise. They’re also more likely to complain to friends and family. 

But retailers may be able to retain customers and protect their reputations if they specifically target so-called ‘serial returners’ with the policy change. Serial returners include people who order multiple sizes, colours or models of a product – then choose one and send the rest back. Last year, a study found that more than half of online shoppers in the US buy more than they intend to keep. 

Another shopping behaviour that’s contributed to the growth in returns is known as ‘wardrobing’ or’ retail borrowing’. Someone buys something for short-term or one-off use and then sends it back to the retailer before the returns deadline expires.

“With higher costs this year and increasing volumes of excess inventory, many retail giants are considering revamping their return policies,” said Overstreet. “Change is coming. But how they implement and communicate those changes will matter.”

Read more about the study here.

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.