THE TAG BLOG
The challenge of e-commerce returns post COVID-19 Pandemic
SEPTEMBER 29 2020
E-COMMERCE RETURNS SURVEY AUGUST 2020
In August 2020, Secure Authentication Brands LLC surveyed online buyers and sellers to examine the impact and consequences of the COVID-19 pandemic specifically targeting online shopping of apparel, shoes, and accessories. It should come as no surprise that the results from the E-Commerce Returns Survey show that many online consumers for this type of merchandise already exist.
However, with the COVID-19 pandemic forcing the closure of many retail stores, and the implementation of more stringent TBYB (try before you buy) policies, many traditional brick and mortar shoppers have converted to online shopping.
According to the survey, 82% of respondents increased or “substantially” increased their online shopping of these merchandise categories during the pandemic.
The unintended consequence of this shift is a significantly higher volume of e-commerce returns, both legitimate and fraudulent.
The National Retail Federation (NRF) reports that return fraud accounts for 8.8% of all returns or approximately $27 Billion in 2019, a 76% increase year over year. The NRF 2020 Security Survey reported that 56% of respondents indicate that return fraud has become a higher priority threat over the last 5 years.
BRACKETING - THE LATEST E-COMMERCE RETURN PHENOMENON
One category of legitimate online returns that has been on the increase is 'bracketing'. Bracketing can be defined as ordering multiple pieces of essentially the same item (varying color, or size) and trying them all to determine which is most preferred for purchase and returning the remaining items.
In the survey, 44% of respondents engage in bracketing which is a growing problem for online sellers as they are inundated with the excessive 'try on' returns.
The costs for online sellers related to bracketing are becoming so burdensome that many have elected to have consumers keep the item rather than issue a return authorization, particularly for single returns of low-value items. There are 3 potential solutions to help mitigate bracketing:
- Implement prohibitive re-stocking charges that would likely reduce online consumer tendency to engage in bracketing. (38% of survey responders acknowledge this is an effective deterrent).
- Develop an online reputation for having very accurate sizing, color, and style representation on the website so that online shoppers are more confident and do not feel the need to order multiple items.
- Some online retailers have incorporated 'Try On Online' allowing shoppers to download their image and position the different merchandise on themselves giving the online consumer a much better sense of a real-life try on experience. See Glasses USA 'try on online' technology.
WARDROBING - THE ACT OF WEARING & RETURNING ITEMS FOR A REFUND
A second category of returns that is also unfortunately growing is fraudulent returns, or items that are being worn and returned, also known as 'wardrobing'. Wardrobing is defined as the intentional act of buying merchandise for the purpose of wearing it for a specific occasion or event, returning the 'used item' post-event, demanding a full refund based on legitimate return criteria (color, size, fit, style, etc.).
An alarming discovery in the E-Commerce Returns Survey revealed that 37% of respondents admit to wardrobing apparel, shoes, and accessories.
Prevent clothing from being worn and returned, also known as 'wardrobing', with a 360 ID Tag. Shown here is the Classic Loop Pack - 22mm.
What was equally disheartening is that the majority of respondents in the survey may not be considered likely return fraud candidates; 63% were college graduates, 58% make over $50K/year, and 61% are classified as Skilled, Professional, or Managerial employees. This indicates that there is no stereotypical wardrobing return fraud profile, with the majority of return fraud respondents not in an economically or socially disadvantaged position. So, it begs the question, why do 'wardrobers' not consider it a form of online shoplifting and therefore illegal or at least morally questionable?
The August 2020 Secure Authentication Brands LLC E-Commerce Returns Survey identified the following solutions to help mitigate wear and return fraud or wardrobing:
- Maintain a very strict no return policy, 19% of online seller respondents try to maintain a strict no return policy, however, 35% of online consumers only feel confident shopping for these items online if there is an easy and fair return policy.
- Anti-wardrobing 360 ID Tags, were identified as an extremely cost-effective solution, as low as 24 cents per item tagged, to prevent wear and return while still capturing the growing online consumer sales opportunities. 52% of online seller respondents are using or are actively investigating the use of 360 ID Tag solutions to prevent wardrobing. This new anti-return fraud tag is considered a win/win for both online consumers and sellers of apparel, shoes, and accessories as it still allows the consumer to try the item on but not wear and return.
The rapid growth of online sales of apparel, shoes, and accessories has also made new online consumers of these items vulnerable to counterfeit/fake merchandise.
59% of online consumers surveyed stated they had been a victim of purchasing counterfeit/fake merchandise, with 24% not immediately discovering or realizing the merchandise was counterfeit and found it impossible to return.
Solutions aimed to combat online counterfeit sales:
- Online sellers have adopted online AI bot powered search services, like Red Points, that scour websites and marketplaces to detect counterfeit/fake merchandise, and infringements, and automatically adopt enforcement and removal processing to protect online sellers and their customers.
- Many luxury consignment and second-hand online retailers of apparel, shoes, and accessories have a dedicated team of professional appraisers that will authenticate and validate all merchandise before it is listed. However, as recently reported in Forbes, this can be a particularly difficult challenge even when a company has dedicated resources to combat counterfeits.
- Many online sellers that do not have the budget for professional appraisal authentication staff have discovered that the covert anti-counterfeit technology and unique serialization of 360 ID Tags provide assurances to buyers regarding authenticity. Therefore, if the online seller is confident that the merchandise they are selling is genuine it can easily be guaranteed to the consumer. Additionally, the seller also protects themselves against counterfeit substitution return fraud when using 360 ID Tags, yet another example of a win/win e-commerce return solution.
The COVID-19 pandemic has increased online sales of all categories of merchandise, as new online shoppers have discovered the ease, convenience, and protections of an online shopping experience. In the category of apparel, shoes, and accessories there has also been a commensurate increase in e-commerce returns, along with the challenges of both legitimate and fraudulent returns and the dubious unintended consequence of counterfeit merchandise sales.
The Secure Authentication Brands LLC E-Commerce Returns Survey highlighted the challenges that are concerning and exceptionally costly to online buyers and sellers. There are powerful solutions like the anti-wardrobing 360 ID Tag which are being cost effectively implemented to provide online sellers with protection against wear and return return fraud, while giving online buyers the flexibility required to feel that return policies are fair and reasonable. This win/win solution supports the continued growth and transition to online sales long beyond the pandemic impact.
360 ID TAG – A VERSATILE, TAMPER-PROOF RETURN TAG SOLUTION
When designing the patent pending 360 ID Tag, we wanted to account for all the scenarios of return fraud. Whether it was to stop instances of wear and return or wardrobing, price tag or counterfeit product switching we knew the solution had to be a versatile, robust and fraud proof return tag.
Prevent clothing from being worn and returned with a 360 ID Tag. Shown here is the Classic Loop Pack - 22mm.
Like all the solutions outlined above, adding a 360 ID Tag to your merchandise still allows the item to be tried on for fit or size. The anti-wardrobing return tag solution starts at just 22 cents per use and is available in 2 widths, 10mm or 22mm, and is sold separately or in 4 different return tag package combinations suited to different types of merchandise.
Want to talk return tags, have questions, or need some advice? Add a comment below, or send me a message at firstname.lastname@example.org and I’ll be happy to help you out.
CHELSEA DUHS - FOUNDER 360 ID TAG
Choose a 360 ID Tag Pack to suit your business
We offer 4 different 360 ID Tag packs with varying combinations of return tag material and tamper-evident security seals; or you can build your own combination. Have a look at the 360 ID Tag products and choose the return fraud solution that suits the types of products that you sell online.
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