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Forter shows retailers how to increase profits by perfecting their returns policies

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More than 38% of online shoppers say that return policies have a major impact on their decision to purchase from any retailer, according to Forter, a global leader in e-commerce fraud prevention, that helps online stores to identify and block abusive returns.

Nearly one in four customers have abandoned a shopping cart due to poor returns options, and 31% of consumers would not shop again at a retailer following a difficult returns experience.

Merchants with liberal returns policies give themselves a competitive edge, but the policy must not make the business vulnerable to abuse or fraud, particularly in the high value world of luxury watches, which have seen online sales increase during the current healthcare crisis.

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There are several types of abuse that cost retailers time and money, including:

  • “Wardrobing” or “Free Renting”: Abusers purchase an item, use it once, and return the item for a refund. Most commonly associated with apparel, this practice extends to other types of items as well.
  • High Return Rates: Consumers return a high percentage of orders back to the merchant, using different cards and addresses to hide the practice.
  • Returns Fraud: Abusers return a different, often less valuable, item while collecting the value of the original item.
  • Appeasements: Consumers initiate multiple or false complaints about the quality of an item for a discount or refund.
  • Risk-free inventory: Resellers buy inventory at promotional prices to sell at full price, then return unsold inventory.

Forter has just announce a new solution called Forter Returns Abuse Protection, which helps merchants perfect their returns process. The system lets retailers:

  • Approve or decline every transaction, so that merchants can block returns-abusers from placing more orders that will likely result in additional returns.
  • Approve or decline every returns initiation, at the point of the returns request (e.g. online, call centre agent).
  • Flag suspicious accounts, enabling merchants to enforce policies at the account-level; for example, making repeat abusers ineligible for free returns shipping or only allowing in-store returns.

The system has a full dashboard that tracks returns KPIs and gives an in-depth view of return data from a single screen.

With 10% of all items sold in the United States returned, merchandise returns are forecast to cost American retailers $550 billion in 2020.

Fraudulent returns comprise a significant percentage of this sum, costing retailers $24 billion annually, according to research published by Appriss.

“Well-established retailers are curtailing or altogether eliminating their flexible returns policies because of the cost of abuse. It’s very unfortunate that a few people can spoil a terrific consumer experience for everyone,” says Michael Reitblat, CEO and co-founder of Forter.

“With Forter retailers can now proactively and fairly enforce their online returns policies, and still deliver a best-in-class experience their loyal customers expect.”

Returns abuse costs businesses money in a number of ways including tying up stock that could have been sold to legitimate customers and the expense of bringing watches back to mint conditions. Across retail, only 50% of returned items can be resold at full price due to product wear and tear. There are also costs associated with processing returns, restocking inventory and shipping that eat into profits. And returns abuse can make it financially unfeasible for a merchant to support a customer-friendly returns program, which results in a poor customer experience.

“Returns abuse is a major challenge for retailers. It impacts profitability and threatens their ability to provide a competitive customer experience,” said Vikrant Gandhi, industry director at business consultant Frost & Sullivan.

“Forter’s Returns Abuse Protection enables merchants to accurately identify abusers, both online and offline, so they can offer consumer-friendly policies. With the collective intelligence of its Global Merchant Network, Forter analyses consumer behaviour across all customer touch points to identify and stop abuse,” he adds.

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Rob Corder

The author Rob Corder