Retailers are struggling to cope with the volume of refund requests they feel obliged to grant despite them being unfit for resale according to research from Barclaycard.
The survey by Barclaycard found that 57% of merchants surveyed grant refunds regardless of product condition in the name of good relationships with customers.
Those merchants estimated that 26% of goods refunded are unfit for resale, not including faulty or damaged stock. This results in stockrooms being filled with unsellable items that include items that have clearly been used, are marked or have parts missing. Retailers however are trying to solve the issue. One of the strategies being used is to restrict free returns.
“Accepting that the issue is not going away,” said Barclaycard, “a fifth (22%) of retailers have introduced a new system to dispose of stock they cannot resell. One in ten (11%) have partnered with a reseller to resell items on at a loss, but such is the volume of stock that eight per cent have even moved to a bigger warehouse to store unwanted goods.
“On the other hand, some retailers have opted to restrict their policies in a bid to cut the level of returns, particularly for online purchases. Driven by the buy-and-return habits of so-called ‘serial returners’, almost four in ten (37%) merchants admit that they do not offer free returns as a way to discourage shoppers from returning non-faulty items. A further 12% have stopped offering this service because it became too expensive.”
According to Barclaycard, restricting returns can alienate some customers.
“Retailers’ decisions to restrict returns policies could ultimately be having a negative impact on their business,” said Barclayclard. “Over a third (36%) of consumers claim they would be put off shopping somewhere if there was a charge to return items by post or courier, making this more important to shoppers than quick delivery (in contrast, only 15% would be discouraged by a delivery taking more than 3 days) and lack of online customer support (18%).
“Consumers are also looking to retailers to provide multiple options for how to return items (49%), refunds instead of credit notes (46%) and a long window for returns (40%).
Sharon Manikon, Customer Solutions Director at Barclaycard, commented: “Retailers are faced with the difficult task of ensuring they can manage the influx of returns which comes hand-in-hand with online and impulse shopping, without compromising their bottom line, or their relationship with customers.
“Our research demonstrates that offering a good returns policy can help retailers attract and retain customers. However, it’s also crucial to be clear on when customers can and can’t return items to limit the amount of unsellable stock. This will be particularly important in anticipation of major shopping events such as Black Friday, when retailers are likely to see a spike in sales and, subsequently, returns.”
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