From clothing worn once for a special event then returned for a full refund, to tins of half-used paint taken back to store containing a brick to make up the weight, fraudulent returns are an ever-growing problem for retailers – and one that isn’t going to go away any time soon.
With global e-commerce retail sales expected to reach $8.1 trillion (£6.8 trillion) by 2026, and a return rate for online purchases of around 30%, effective returns management is fast becoming a key area of strategic focus for retailers keen to streamline operations and safeguard their future in this fast-paced market.
So-called ‘deshopping’, a type of unethical returns behaviour whereby people buy something with the intention of using it and deliberately returning it to the retailer, is one area of this to which retailers are increasingly turning their attention – and rightly so.
Deshopping: A growing phenomenon
I have spent more than two decades researching returns behaviour – including serial returning – from the perspective of consumers and both large and independent retailers alike.
I’ve heard stories of retailers examining returned crockery only to find traces of broccoli on the plates. Then there was the homeware retailer I worked with who had a tin of paint returned with a brick inside to try to replicate the weight of the paint that had evidently been used by the customer prior to trying to return the tin for a full refund. And, of course, there are countless tales of garments being taken back with items in the pockets suggesting they had been worn before being returned.
Plenty of customers reported deliberately buying a dress for a wedding, for example, planning to return it afterwards – but deshopping isn’t always premeditated to that extent. Sometimes customers might get ‘buyer’s remorse’ and justify returning a garment because it was expensive and they didn’t like wearing it as much as they thought they would.
The common thread is that, at the point of return, they knew what they were doing was unacceptable – but the retailer didn’t make a fuss.
‘Serial returners’ identified
My research shows deshopping happens across all product categories and all types of retailers, whether online or bricks-and-mortar stores. Both men and women do it, and it is more common than most people think.
I have been at a children’s birthday party and been asked if I liked the picnic blankets and marquees. When I said yes, I was told that they would be taken back to the shop on Monday morning.
What leads someone to engage in this type of behaviour? That’s an area I’m focusing on in my current research – the personality factors that influence deshopping – but my earlier research into this topic suggests it’s a learned behaviour influenced by family, friends and social reference groups, as well as – ultimately – how easy it is to get away with it.
Deshoppers I’ve spoken to talked about it being scary the first time they did it, but learning quickly how to do it, and which retailers to do it with. Like compulsive shopping, it can be addictive. I’ve had consumers say to me: “When I’m buying, I’m losing. When I’m returning, I’m winning.”
Often items are returned as they were sold, leaving the retailer non-the-wiser as to whether they have been used or not, while sometimes they are deliberately damaged, purely in order to give the purchaser a ‘reason’ for the return. This may be done in desperation out of fear of not being able to take it back otherwise, knowing that the worst thing that will happen is that the retailer will refuse the return.
The financial burden of returns
Aside from the logistical nightmare that high numbers of returns represents and the associated impact of that on the environment, fraudulent returns can be a huge drain on the profits of retailers and their supply chain partners.
A 2020 study by KPMG estimated that reverse logistics (returns) costs businesses in the UK a combined total of around £7 billion a year. Add to that the loss of sales caused by damaged products that cannot be resold, and it’s not difficult to see why this is a growing area of focus for retailers.
In its most recent results statement, global online fashion retailer ASOS puts the resulting negative financial impact of ‘a small number of customers’ with above average orders and a high return rate at more than £100 million for the financial year 2022/23.
Efficient, effective returns management
In our upcoming webinar The Future of everything: The future of deshopping on 12 July, I will be exploring some of the returns management techniques retailers are using to try to combat deshopping and inviting companies struggling with this issue to learn from best practice and get involved in further research on the subject.
Because deshopping is an issue that can and should be tackled, but needs to be addressed carefully and in a considered manner to avoid alienating genuine shoppers.
In this age where the consumer holds all the power – where free delivery and relaxed returns policies are expected – and where genuinely time-poor customers may rely on trying and testing items at home before returning what they don’t want, no one wants to risk losing customers.
Strategies for success
On our Strategic Marketing MSc, we talk about the importance of building a strong relationship with your customer as key to understanding returns behaviour and ultimately managing those returns in the most effective way.
Dissuading deshoppers is about tightening up returns policies while simultaneously educating customers on the need to charge for returns services or be strict about tags not being removed, for example.
Dedicated returns-only counters in stores where trained staff can inspect items and engage with customers around the reason for their return may also help encourage the more positive consumption behaviours that will be key to future retail success.
With research by CIFAS showing more and more online shoppers in particular are regularly claiming fraudulent refunds, it is time we tackle issues like deshopping before the problem gets worse.