A significant cost to retailers, returns have emerged as a challenge and retailers need to continually adapt to emerging forms of ‘return fraud’ as policy changes are having little effect on deterring fraud and abuse, says the 2024 Consumer Returns in the Retail Industry.
- The comprehensive report has been brought out by Appriss Retail in collaboration with consultants Deloitte.
- The US survey indicates that most retailers have not yet established a dedicated role to oversee returns. More detailed research is needed to clarify who should manage the returns process and what responsibilities this role should encompass.
- Although retailers continue to test new policies and systemic rules, the amount of fraud and abuse remains a significant issue that should be addressed. Fraudsters and abusers are often becoming adept at circumventing retailer’s controls across all channels including call centres.
FINDINGS: With $685 billion in merchandise returned in 2024 and $103 billion lost to fraudulent and abusive returns and claims, the figures underscore an urgent need for retailers to adapt and evolve their strategies.
- Driven by higher return rates from digital sales, BOPIS (buy-online-pick-up-in-store), and BORIS (buy-online-return-in-store), returns have emerged as a challenge for retailers, the issues further compounded by professional fraudsters and shifting consumer return behaviours.
- Total returns for the retail industry amounted to $685 billion in merchandise in 2024.
- The total returns rate as a percentage of sales for 2024 is 13.21%.
- The percentage of abuse and fraud impacting total returns in 2024 is 15.14%.
- The total amount of dollars lost to fraudulent and abusive returns and claims in 2024 is $103 billion.
- 84% of retail executives report their companies have changed return policies in the past year to combat fraud, however this is having adverse implications.
- 55% of consumers have decided not to buy from retailers due to restrictive return policies, while 31% stopped shopping at certain retailers due to negative return experiences.
- Online sales are expected to increase by 5%, achieving a total of $1.48 trillion in total online sales.
- Returns from online sales (inclusive of BORO and BORIS) are $362 billion.
A growing challenge for retailers in online returns is claims and appeasements. Claims and appeasement fraud & abuse are estimated to be worth $21B. Claims arise when shoppers report issues such as missing deliveries, damaged items, or product defects. To address these concerns, retailers often offer appeasements, such as credits, to help maintain customer satisfaction.
- When identifying fraudulent online returns, retailers surveyed stipulate that the most common indicator is empty boxes at 31%.
- The return rate for in-store purchases was 8.72%, while online returns reached 24.52%. Combined, the overall return rate stands at 13.21%.
- As retailers adopt no-receipt, no-return policies, fraudulent actors may shift to tactics like counterfeit returns. To help them stay ahead, retailers should continually adapt to emerging forms of return fraud.
- 83% of companies surveyed have tightened return policies to decrease returns, and 84% to combat fraud.
- But are these efforts hurting customer satisfaction more than necessary? What the data suggests is that policy changes are having little effect on deterring fraud & abuse. Policies can be subject to human error, bias, and are frequently bypassed to appease the consumer.
- The fine line for retailers is to implement solutions that have minimal impact on the consumer experience.
- Brand loyalty can be fragile, and competition continues to grow so holding on to consumers is often a key to long-term success.
THE REPORT: The 2024 Consumer Returns in the Retail Industry report draws insights from a blend of data sources, including physical stores and online channels, featuring data from surveys of 150 North American retail executives, 1,000 consumers, the United States Census Bureau, Appriss Retail customer data, and a Retail Dive survey. Appriss Retail’s client base features over 60 of the top 100 US retailers.
ABOUT: Appriss Retail provides retailers with protection against fraud and abuse for every transaction, no matter where it happens. With more than 20 years of retail data science expertise and experience, it has built a collective, omnichannel intelligence platform that is trusted by over 60 of the top 100 US retailers, covering one-third of all US omnichannel sales across 150,000 locations. Globally, Appriss Retail reaches 45 countries across six continents.
- Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (DTTL), its network of member firms, and their related entities.
