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The ‘retail returns’ saga – is it time for retailers to stand together?


Regular readers of the Laybuy blog will know that the problems caused by returns in the retail industry is a topic that we have some opinions on. Laybuy’s co-founder and business development manager, Alex Rohloff, wrote a piece back in November 2018 about the problems caused to merchants by the trend of ‘retail commitment-phobia’ that we are seeing nowadays. And on 5thDecember 2018, Laybuy drew the UK media’s attention to what we coined #RevenueReturnsDay – the first day of December on which UK retailers make any revenue at all, due to the deluge of returns during the festive shopping season.

It’s not just us at Laybuy that have been making noises about the impact of the increasing epidemic of regular returns. Retail experts from Andrew Busby to Steve Dennis have long been lamenting the potentially ruinous effect of the e-commerce free returns phenomenon that has, however unintentionally, created a consumer culture of ‘buy ten, return nine’.

So why are we harping on about this again?! Well, we at Laybuy are pleased to note that there does appear to be a shift in merchants’ attitudes towards this issue. Where retailers have been immersed in a ‘war of the returns’, eager to entice shoppers by offering the very best delivery and returns deals just to make a sale, we can now see the beginnings of a revolt. According to a recent report in The Times, a fifth of stores have made their returns policy more stringent over the past year, with a further fifth planning to do so in the next 12 months.

Take ASOS as an example. As an online only merchant, the fashion giant has offered the earth to its customers to ensure an easy and seamless shopping experience. Free standard delivery on all orders above £25, as well as free next day delivery on any order at all for a mere £9.95 annually, not to mention free returns as standard.

Unfortunately, ASOS’s generosity has created something of a monster, with a minority of shoppers abusing its system by purchasing items they never intend to keep (often for Instagram photo opps), or even wearing clothes for an event or a night out, and then returning them. Even the most honest of returners have fallen into the ‘try before you buy’ culture of returning 99% of products purchased in different shapes, sizes and colours – there isn’t a ‘no more than ten items at a time’ limit when your bedroom has become the changing room.

So ASOS is fighting back: Last month it announced that, to keep its return policy sustainable both for itself and the environment, it would be monitoring more stringently the returns activities of shoppers, and would take action by ‘blacklisting’ shoppers found to be abusing its returns system. This is a brilliant step in the right direction which I, for one, applaud. In the competitive times that we live in, an initiative like this is a brave one on ASOS’s part – but is it enough?

The problem is that ASOS is still offering (essentially) free delivery and free returns. It has stuck to its word and suspended the accounts of those returning too much, but this has led to an army of disgruntled shoppers who feel that they are being punished merely for legitimately taking advantage of what ASOS offers. Yes I imagine some rotten apples who are wearing clothes and returning them have been captured, but the vast majority of discussion around the new policy on social media channels is angry shoppers who feel they have been unfairly targeted for returning a handful of items. This raises the concern that surely only so many accounts can be suspended before this new policy in itself becomes unsustainable for the business. As a result, I imagine that in the longer term a similar pattern of purchases and returns will largely continue, still impacting on ASOS as a business, as well as on the environment.

This is not a criticism of ASOS – in fact quite the opposite, as I admire its bravery in taking a stand at all in the highly competitive e-commerce landscape. Making a real change, however, relies in my opinion on a coming together of retailers to say ‘enough’. If retailers across the board were to commit to an industry policy to end the practice of free delivery and returns, then the element of competition would be taken away. Brands wouldn’t have to worry about shoppers going elsewhere, as there would be nowhere else to go. And those genuine shoppers who simply enjoy the convenience of shopping online, yes sometimes making returns, but on the whole being committed to a purchase, would continue to shop.

So rather than go head to head on this issue, I say the retail industry comes together to tackle it as one, for the good of brands, for the good of retail and for the good of the environment. We’d love to think Laybuy can contribute too – on average, the number of refunds on purchases made using Laybuy is 3.76%, dramatically lower than the industry average return rate of 15-70% - but of course this is just one solution to a very complex problem. We know what that problem is; now let’s work together to solve it.

SOS: Save our Solvency
You don’t need a miracle to survive in retail – just ask the unicorns

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Gary Rohloff