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Amazon Is Banning Customers Over Frequent Returns

Amazon is banning customers over frequent returns

Correction: This story has been corrected to specify that CBRE estimates online returns were $32 billion for the holiday season in 2016, not the full year as previously reported.

Dive Brief:
Amazon has been reportedly revoking Prime memberships and banning shoppers on its website for those who return too many orders or return items for reasons deemed unacceptable, according to The Wall Street Journal.

In many cases the e-commerce giant doesn’t alert affected customers what the reason is for a shopping ban, according to the report. The shopper simply finds themselves locked out.

An Amazon spokesperson told Retail Dive in an email that the company’s policy is to “take action when appropriate,” and that “if a customer believes we’ve made an error, we encourage them to contact us directly so we can review their account and take appropriate action.”

Dive Insight:
Returns have emerged as a fact of life in the e-commerce era. For some online shoppers, ordering multiple sizes of a product with the intention of shipping back what doesn’t fit has become the norm, much to the expense of retailers.

More than 40% of retailers have seen an increase in such “intentional returns” in the past year, according to omnichannel retail management firm Brightpearl. That’s exacerbating the already margin-crushing costs of fulfillment and delivery for orders that customers actually keep: 44% of retailers say margins are being strongly impacted by handling and packaging returns, with 70% saying they expect to be squeezed further as the practice intensifies.

And it’s intensifying. The value of retail returns last year rose 53% from 2015 to $400 billion, and the growth of e-commerce is stoking that, according to returns and overstock supply company B Stock. Returns of brick-and-mortar purchases tend to hover at 8%, while e-commerce returns can reach as high as 15% to 30%, according to CBRE, which says that likely value of online returns during the 2017 holiday season was $32 billion, up from 2016’s estimated $28 billion.
Returns are expensive for retailers, however, representing lost sales, sometimes damaged or opened inventory and extra staff time. “It is prudent for Amazon to make it clear to all consumers that there are policies that govern returns to avoid issues like this,” Jim Fosina, CEO of Fosina Marketing Group, said in an email to Retail Dive. “There can’t be a wide open policy in terms of returns. The criminal element in the world is constantly searching for gaps to exploit. Fraud not only impacts the company, it can eventually impact the consumer, in some way, could be through higher prices.. and/or more restrictive policies.”

In fact, the e-retailer’s return policy remains “very liberal and customer friendly” despite what was described in the Journal’s report, Fosina said, and compared its actions to rejecting fraudulent credit cards. Still, it would behoove Amazon to be more upfront about the policy, he also said.

With a dearth of stores relative to rivals, Amazon is at something of a disadvantage. Of the three options for returning unwanted items — return to store, return to distribution center and return to a third party — return to store is not only usually the cheapest option for retailers, who may benefit as some shoppers buy something else, but it’s also preferred by some 60% of online customers themselves, according to consulting firm AlixPartners.

Some shoppers attempt to return damaged or heavily used merchandise that can’t be resold, and retailers like L.L. Bean, that for years have had liberal return policies, are now scaling those back. Retailers including Best Buy, J.C. Penney, Sephora, CVS, Advance Auto Parts, Dick’s Sporting Goods, Home Depot and Victoria’s Secret employ the firm Retail Equation (owned by Appriss Inc.), which uses algorithms to develop a “risk score,” based on consumers’ shopping and return behavior, to help identify fraudulent attempts or serial returners.

But getting too tough can backfire. “Brands are now seeing the wrath of customers who dislike being ‘profiled’ based on their returns behavior,” Linc Vice President of Marketing Luke Starbuck told Retail Dive in an email. “Even leading brands who talk about being customer-focused are oftentimes still operating on an old-world model of handling returns and reinforcing it with unchanged KPIs and siloed reverse logistics teams. Today, returns are a natural part of the ecommerce shopping cycle, and brands who do this well, actually engage customers, increase lifetime value and drive the next purchase – thus creating true loyalty.”

Amazon didn’t address Retail Dive’s questions about how many returns the company deals with each year or whether apparel shoppers are spared to any extent considering that intentional returns are especially prevalent in that category. “We want everyone to be able to use Amazon, but there are rare occasions where someone abuses our service over an extended period of time,” a spokesperson said in an email. “We never take these decisions lightly, but with over 300 million customers around the world, we take action when appropriate to protect the experience for all our customers.”

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