THE TAG BLOG
Holiday Return Policy Abuse: What it is and how to stop it
SPOTLIGHT ON HOLIDAY RETURN POLICY ABUSE
According to estimates, shoppers return up to 40% of e-commerce product purchases. While many online returns are legitimate, a growing portion is fraudulent. Return policy abuse, like wardrobing, tag tucking, and snap and send back, is becoming a common occurrence.
Research from the National Retail Federation shows that 5.9% of returns are now fraudulent, which equals a value of roughly $25.3 billion per year. Online returns more than doubled in 2020 alone, leaving e-commerce businesses floundering under the costs.
Although online returns happen throughout the year, they reach a crescendo during the festive season. Holiday return policy abuse can become crippling for an e-commerce business if you don't take measures to curtail it.
Fortunately, there is a way you can stop holiday return policy abuse in its tracks. If you want to protect your bottom line from return policy abuse, keep reading to find out what it is and how you can prevent it from happening to your e-commerce business.
Let's break it down.
- What Is Holiday Return Policy Abuse?
- How Return Policy Abuse Can Impact Your E-commerce Business
- How to Prevent Holiday Return Policy Abuse
- Put a Stop to Return Policy Abuse With 360 ID Tags
WHAT IS HOLIDAY RETURN POLICY ABUSE
Before we get into how to prevent it, what exactly is holiday return policy abuse? Return policy abuse happens when shoppers abuse a company's return policy for their gain or to the point that it erodes profitability for the seller.
Types of Return Policy Abuse
One of the most common return policy abuse practices is wardrobing, also known as wear and return and tag tucking. Shoppers shamelessly tuck in the tag on apparel items, wear the garments once or twice, and then repackage and return them. This type of return policy abuse can be especially prevalent when shoppers attend once-off occasions during the holidays.
Social norms dictate that people won't attend their holiday party with a visible tag showing! Shown here is the 360 ID Tag Classic Loop Pack - 22mm.
Another form of wardrobing is "snap and send back" returns. Here shoppers order clothing, take pictures in the garments, typically for social media, and then immediately return them. This is most common with high-ticket, on-trend clothing items.
According to Forter, a fashion blogger was caught buying the latest merchandise, blogging about her creative looks, and then returning 85% of the outfits to the merchant with the return period. Yes, it happens.
Other forms of return policy abuse are tag swapping, counterfeit product switches, and replacing boxed items with things of similar weight. E.g. an iPhone for a small potato.
Why Holiday Return Policy Abuse Is a Thing
As we said above, return policy abuse takes place during all months of the year. However, during the festive period, it often increases in response to online retailers' more lenient policies.
Many online stores modify their e-commerce return policy time frames to attract buyers during the holiday season. This gives people a chance to return or exchange unwanted gifts. For instance, this year, Amazon is extending its time window for free returns from 30 days to 120 days. This means you can return a gift bought in October 2021 until the end of January 2022. Unfortunately, extended return shipping times are a recipe for holiday return policy abuse.
HOW RETURN POLICY ABUSE CAN IMPACT YOUR E-COMMERCE BUSINESS
The holidays are a bumper quarter for most online retailers. However, if you fall victim to holiday return policy abuse, this can suck the lifeblood out of your margins. Here are some primary ways these returns can affect your e-commerce business.
Stock and Profit Margin Losses
If your customers are returning products at a high rate, you're likely to experience increased levels of stock loss. Many retailers wind up throwing away more than 25% of returned items.
Less than half of the items that don't end up in landfills sell for their full price again.
Inflated Overheads and Logistics Costs
Besides robbing you of stock and eroding your margins, return policy abuse also unnecessarily inflates your overheads and logistics costs.
Facilitating the return process is costly; every fraudulent return your e-commerce business has to process adds to logistics expenses, customer care-related payroll expenses, and more.
Inflated Repackaging and Refurbishing Costs
Another way return policy abuse leeches your profits is repackaging and refurbishing costs. Many returned items require repackaging before you can list them as stock again.
HOW TO PREVENT HOLIDAY RETURN POLICY ABUSE
Attractive return policies are essential if you want to remain competitive as an e-commerce business—especially during the holiday season. But they can also open the door for brazen shoppers to take advantage of you.
So how can you stop holiday return policy abuse from tanking your margins and fraudulently swamping your business? The good news is that you can take a few simple steps to discourage shoppers from abusing your e-commerce return policy without harsh policies or impacting customer experience.
1. Make Your Returns Policy Clear and Readily Available on Your Site
One of the first steps is to make sure your returns policy is clear and readily available to shoppers. While this won't necessarily prevent fraudulent returns, it will help ensure shoppers don't accidentally violate your e-commerce return policy.
2. Make Sure All Returns Are Inspected Thoroughly
You should also ensure that you have a thorough return inspection process in place. This will help ensure your business does not accept back items that have been used or swapped out for fakes.
3. Eradicate Holiday Return Policy Fraud With 360 ID Tags
If your e-commerce business deals in apparel, shoes, bags, accessories, or jewelry, one of the most effective steps you can take to prevent return policy abuse is using 360 ID Tags.
The 360 ID Tag is specifically designed to stop return policy abuse practices like wardrobing, tag tucking, and product swapping. The secure return tags are intentionally visible and tamper-proof. Because they can't be tucked in, hidden, or swapped, 360 ID Tags effectively stop wear and return practices and product switching.
Clothing with the anti-return fraud 360 ID Tag can still be tried on for fit. Shown here is the Extended Loop Pack for dresses - 22mm.
What's more, they are also simple to loop through clothing, shoes, accessories, bags, and jewelry and require no special tagging equipment; all you need is a pair of scissors.
PUT A STOP TO RETURN POLICY ABUSE WITH 360 ID TAGS
Holiday return policy abuse is not something your e-commerce business should put up with. Return policy abuse can rob you of sellable stock, squander your operating budget, and eat into your profit margins.
Here at 360 ID Tag, we believe that e-commerce businesses deserve a fair marketplace and the ability to offer competitive return policies without being taken advantage of. Put a stop to return policy abuse this holiday season and into the future.
To get started with 360 ID Tags, check out our range of secure return tags today.
CHELSEA DUHS - FOUNDER 360 ID TAG
Find the right 360 ID Tag pack for your business
We offer a variety of 360 ID Tag packs, with different combinations of return tag material and tamper-evident security seals. You can also create a custom combination to fit your specific needs. Browse our 360 ID Tag products and select the return fraud solution that best suits the types of products you sell online.
Wardrobing, also known as wear and return, is a form of fraudulent returns where consumers purchase merchandise, use it for a short period, and then return it for a full refund. Appriss reports 50% of retailers experienced wardrobing in the past year and notes "return of used goods" tops retailers' biggest challenges.Read more
Is your e-commerce store plagued by return policy abuse over the long holiday shopping and return season? Extended return windows until the end of January and unscrupulous consumers engaging in wear and return fraud have businesses looking for solutions. Learn how to prevent wardrobing and other forms of return fraud with secure anti-return fraud tags.Read more