Generate Many Happy Returns: How One Bad Return Experience Can Hurt Retailers

The experience a shopper has returning a product online or in-store can have a dramatic impact on loyalty. One bad experience can force a consumer to sever a relationship with a retailer, while a positive experience can motivate a consumer to buy more goods.

New data supports the impact of returns on loyalty, showing that the results of a retail returns experience can be immediate — dollars lost vs. dollars gained. So, how can retailers ensure a better returns experience? By avoiding rigid standards like “no receipt, no return” policies and investing in more flexible and personalized solutions.

Research Reveals the Effect Returns Have on Consumers

In a recent survey of more than 1,000 North American consumers, Appriss Retail research found:

• 31 percent of respondents said they have stopped shopping at a retailer or e-commerce store due to a negative return experience; and
• 70 percent said they purchased more at a store after a positive return experience.

The study also found that 55 percent of consumers avoided purchasing from a retailer due to the company’s restrictive returns policy. Overall, the data points to the returns experience being more than an emotional reaction for consumers, but one that trickles down to their wallets.

At the same time, the study highlights a major disconnect between retailers and consumers. Ninety-nine percent of the 150 retail executives surveyed in the study believe their customers are satisfied with the returns experience. To be blunt: they’re not. And the main culprit is stricter returns policies. In fact, the Appriss Retail survey discovered eight in 10 retailer executives said they have tightened their returns policies to reduce fraud.

While it’s understandable why retailers want to reduce fraud — a $101 billion problem according to the National Retail Federation (NRF) — retailers can fight fraud via less rigid solutions.

AI Powers a Flexible, Personalized Returns Program

Fraudulent returns harm retailers in two ways. First, there’s the price of goods that retailers pay to replace an item that is fraudulently reported as missing or damaged. Secondly, there are costs associated with reshipping products in a fraudulent online returns claim. According to the Merchant Risk Council, refund/policy abuse is the No. 1 threat for retailers in North America and Europe.

It’s clear why retailers want to limit bad actors that exhibit fraudulent and abusive returns behavior. However, a stricter policy, such as a “no receipt, no return” policy can upset honest and loyal customers, potentially hurting a retailer’s profits in the long run.

Retailers can ease up on a returns policy by deploying a more personalized approach. With tools that leverage artificial intelligence and shopper data, retail associates feel supported at the point of the return. AI can automatically analyze a consumer’s shopping history across all channels, offering tailored recommendations on whether to approve or decline a return. Any suspicious behavior is flagged, helping associates make informed decisions to deny returns when necessary — effectively deterring fraud while ensuring a positive experience for loyal customers.

Retailers Can Increase Customer Satisfaction Through Returns

The Appriss Retail research highlights that consumers don’t want retailers to have rigid, blanket returns policies. AI can help a store tailor the returns experience to each consumer, removing the risk of upsetting loyal shoppers.

Customer satisfaction is the name of the game in retail and that extends to returns. Having an AI-powered solution support a more lenient, personalized returns process will benefit a retailer’s bottom line while ensuring loyal shoppers stay happy.

Pete Barker is director of product at Appriss Retail, a company that reduces losses from retail fraud and theft while protecting the retail customer experience.