The holiday season is over, the decorations are down and a new year has begun. A year of new targets to meet, new products to sell and new trends to capitalize on. But before retailers can earn the big bucks in 2016 they need to deal with an old problem: returns season.
Black Friday, Cyber Monday and the peak December shopping season is the time of year that retailers need to perform and make a vital contribution to their revenue for the year. But customer buying habits are changing, and the ease with which customers can buy products online, saving money compared to the high-street but often without the opportunity to try before they buy, means product returns are increasing.
Add to this the well-meaning relative who buys you a gift so unsuitable that you can’t wait for them to leave before trying to exchange it, and it’s not hard to see why January can be such a headache for high-street retailers and ecommerce merchants dealing with an influx of refund requests.
In the UK, Retail Times reports that up to 10% of all refunds for the year will hit UK retailers between Boxing Day (26th December) and late January. A large portion of these returns will be clothing, according to fashion retail magazine Drapers, but we often see similar trends in jewellery and high-value technology sectors. Consumers can be more indecisive in purchases of this nature, leading to a phenomenon known as buyer’s remorse and frequently higher levels of returns.
If retailers fail to make the returns process fair and convenient for customers, they leave themselves open to risks that could impact their bottom line. The most obvious risk is that of losing customers unhappy with your level of service, and who will simply go elsewhere. Most likely, they will also communicate their feelings to friends and family, as well as sharing their negative experience online, causing further reputational damage to your business.
Merchants could also face the costs of dealing with customers who initiate a chargeback through their bank if they feel unable to obtain a refund through the retailer. Although chargebacks were originally designed to provide some protection for cardholders who fell victim to fraudulent transactions, many consumers take advantage of the fact that banks will often rule in their favour rather than that of the merchant. They initiate a ‘friendly fraud’ chargeback, whereby they claim a transaction they previously made was actually not authorised by them, securing the return of funds from the bank, who then passes the costs on to the merchant..
Before working to prevent risks, merchants must first understand threats such as these that could jeopardise their revenue in the early part of 2016 in particular. Visit our services page to find out more about protecting your business from chargebacks and threats from ‘friendly’ places that can be fought successfully.
