You could soon be punished for making too many returns at your favorite retailer

  • Retailers may start punishing serial returners by withholding discounts as returns costs stay high.

  • Some brands have started giving discounts to keep unwanted items or charging to send things back.

  • These policies are part of a broader effort by retailers to recoup the high cost of returns.

As returns remain an expensive headache for retailers, they could start turning to a new solution: withholding deals from frequent returners.

Retailers have long tracked customers who make frequent returns, known as serial returners, and cracked down where they deem necessary. Online retailer ASOS, for example, changed its return policy in 2019 to deactivate any shoppers who returned too much, while Amazon customers began complaining back in 2018 that they were being banned over too-frequent returns.

But technology may now allow retailers to take their punitive measures one step further.

Bloomreach, a tech firm that helps retailers personalize the online shopping experience, can track its clients' serial returners and ensure that those shoppers aren't rewarded with discounts and deals, Brian Walker, the company's chief strategy officer, recently told The Wall Street Journal.

"Marketers double down on that group because they tend to order more, but they are among the least profitable customers," he said.

This means that if you're a frequent customer — and frequent returner — at a specific retailer, you may see fewer incentives to shop.

Retailers are employing other tactics to discourage high returns. Some, like Zara, Abercrombie & Fitch, and JCPenney, have started charging a flat fee to ship your unwanted items back. And Amazon has started charging a $1 fee to send returns back through UPS — instead, customers are encouraged to drop their packages off at Whole Foods, Kohl's, and Amazon stores for free. Of course, some retailers, like Target, have generous return policies, in part to bring customers back to their stories.

Other brands are trying to cut back on return costs by incentivizing shoppers rather than penalizing them: Last year, Dress the Population began offering a discount of 10% to 70% if they kept the items they bought, according to The Journal.

Why returns are such a challenge for retailers

When online shopping ramped up during the pandemic, so did returns.

Without the opportunity to touch and feel products or try items on in person, shoppers began resorting to other tactics to ensure they're getting what they want, like "bracketing" their purchases — buying multiple sizes or colors of the same item and sending back what they don't want.

All told, shoppers returned about $212 billion in online purchases in 2022. For every $1 billion in sales, the average retailer sees $165 million in returns, according to data from the National Retail Federation.

This creates a massive headache for retailers, who have to shell out to get those items back, a process that's gotten more expensive amid higher shipping and labor costs. One estimate found that it costs a company 66% of the price of a product to process a return; another found that a return can cost a company $10 to $20, not including the cost of freight.

And with those costs staying high in 2023, more retailers will likely continue passing those costs back to the customer.

Read the original article on Business Insider