Returns By the Numbers

Retail return rates have been on the rise in recent years, costing US based retailers $816 billion in 2022 up from $761 billion the previous year. As more and more shoppers turn online to make purchases various risks factors such as an item not fitting properly or being not as described has majorly impacted the overall growing figure. Additionally when shopping online, customers have the ability to easily return items without ever having to step foot in a physical store. This convenience has led to a rise in impulse buying, as well as a decrease in the perceived value of an item. As a result, customers are more likely to return items that they may not have even considered purchasing in a physical store.

Returns peak during the holiday season, on average retailers expect 17.9% of merchandise that is sold to be returned during the holidays, costing retailers an estimated $171 billion. To the dismay of consumers to combat the growing return rates and drain it is having on their bottom line many retailers are instituting new return policies after years of subsdizing them. Long gone are the days of free returns, retailers are opting to deduct fees from customer refunds if they choose to ship their returns back with many not covering any shipping cost at all. Certain retailers such as Amazon, Target and Walmart have quielty instituted a just keep it policy, as it is more costly for them to process and store the inventory. 

With the growing return rate comes the looming threat of another pesky return related problem, return fraud. Return fraud is when a customer returns an item that they have either stolen or purchased with the intention of returning it for a refund. This not only costs retailers billions of dollars in losses each year, but it also increases prices for honest customers. The National Retail Federation estimated that in 2021 for every $100.00 in returned goods $10.30 was lost to return fraud, accounting for 10% of the $761 billion of returned merchandise in that same year. 

Contributing to the return fraud problem is lenient policies, many retailers have implemented “no questions asked” return policies, which allow customers to return items for any reason, with no proof of purchase required. This has led to an increase in “wardrobing,” where customers purchase an item with the intention of wearing it once and then returning it. In a report by marketing firm Navar it was estimated that “nearly two-thirds of consumers engage in deceptive behavior regarding returns, and only 35% of consumers abide by all return policy rules. A whopping 60% are identified as “rule benders”. Recommendations from the report highlighted making returns more convenient for consumers and establishing additional checkpoints throughout the entie return process, personalizing the experience for the customer, and offering the right loyalty incentives.  

Retailers are proactively taking steps to combat return fraud, such as implementing stricter return policies and using technology to track returns. For example, some retailers are using supply chain tracing technology to track individual items, which allows them to identify any suspicious activity. Additionally, retailers are also using data analytics to identify patterns of suspicious activity, such as a customer who frequently returns items without a receipt or a customer who frequently returns items that have been worn or used. 

Entrupy Fingerprinting is a solution created to help retailers prevent losses incurred from return fraud. Leveraging Entrupy computer vision and microscopy-based technology, it gives retailers a powerful, non-obtrusive way to identify specific products, enabling retailers to know, instantly, whether an item returned is the same as the item sold. Requiring only a simple handheld scanner, the solution is easily implemented,  anywhere and anytime.

Armed with Entrupy Fingerprinting, retailers have a 100% accurate method of facilitating faster return processing, resulting in delighted customers and a more secure supply chain. They can effectively manage return policies and overcome a reliance on human expertise, static knowledge and traditional tagging solutions which are prone to exploitation by bad actors.