If we were to poll e-commerce merchants on their biggest fears and concerns about their businesses, we could probably guess the top three or four answers:
- Fraud and its variations (friendly fraud)
- Chargebacks and returns
- Losing e-commerce merchant account services
They would probably be in that order.
Recently we blogged about a third-party company called Retail Equation (which has since rebranded as Apriss Retail), which tracks chargeback and return behavior of consumers for major retailers, Best Buy, Sephora and CVS among them. We loved Apriss’s foremost mission, to protect those companies from consumers who displayed serial behavior when it came to returning items, charging them back, and even committing friendly fraud.
Since, we’re dialing it back a small step. We’re all for Apriss’ mission, because chargeback fraud is rampant and growing. We think, however, there is a small population of consumers who may be wrongly labeled as serial returners, and that is dangerous for a merchant.
If such a consumer is denied the chance to make a return, what’s to stop them from contacting their credit card issuer and filing a chargeback?
Why strict return policies can be dangerous
This is especially true for retail clothing merchants. We know consumers, mostly female, who purposely purchase two of every clothing item; for example, a small and a medium blouse, then return the lesser fit of the two. It is a widely common practice of female consumers, yet they could be targeted – unfairly – as those who exhibit serial return behavior.
Obviously, consumers aren’t able to ‘try on’ clothes found online before they purchase. A pair of jeans with measurements of 32X34 can often run large, depending on the brand. Thus, the strategy of purchasing two different items to keep one makes perfect sense for the consumer. But what do online clothing merchants do? Run the sale after the consumer has chosen the best blouse and returned the other?
Does too many of these types of returns warrant the loss of e-commerce merchant account services? We don’t think so.
On another level, for those who do take the necessary time to read through and understand an e-commerce merchant’s return policy and find it to be too strict, they are very likely to file a chargeback. Though the chargeback process is different now, it continues to be added stress on the merchant.
Our policy: Contact always works best – and builds credibility
We understand that merchants are busy, often too busy to contact every customer that has an issue.
However, we’ve found that when merchants care enough to contact customers to resolve issues, it brings the relationship to a whole new level. In-person contact lends credibility to a merchant and leaves the customer feeling valued. It also leads to positive reviews, which are invaluable.
Thus, when we hear merchants say they don’t have the time or resources to contact customers, we say ‘try.’ The value of merchant credibility cannot be measured.
We also believe that customer contact is also the opportune time to educate about how damaging a chargeback can be to a business, that a return or refund is always the best result for all parties. With too many chargebacks, merchants will lose their e-commerce merchant account services.
Merchants must also be consumer advocates
In the current e-commerce climate, merchants have no choice but to offer the best customer support they can offer: periodic contact (not overbearing) with shipping and arrival alerts, follow up e-mails inquiring about quality, and perhaps soliciting a quick survey or review.
We like to think customer support, overall, has improved. We hope it has anyway.
E-Commerce merchant account services found here
Instabill has offered e-commerce merchant account services since 2001, the dawn of e-commerce. We are partnered with acquiring banks worldwide to offer merchants custom solutions and live support through our Portsmouth, New Hampshire, USA home office at 800-530-2444.
When our merchants are processing transactions fluidly, everybody wins.
One Review on A Too-Strict Return Policy Can Lead to Lost E-Commerce Merchant Account Services
I agree – the solution is not to have a strict return policy, you need a dynamic one. Science reports in Scandinavia shows that the major part of returning eCommerce customers are also the most profitable ones. Returns are not bad however the post sales process regarding return services, logistic routing etc needs to be personalized based on customer and product “true profitability”. eCommerce transactions are different and eCommerce businesses need to be able to manage and steer themselves based on this new lifecycle profitability which is a result of returns caused by the fact that the fitting room moves home to the consumer. With 30-60% returns all interactions can´t be “human personal” but for sure quick and personalised.