Etailers change return policies in the bid to cut down losses

Industry watchers would agree that, based on the turn of events in the past 2 years, top ecommerce companies’ basic strategy can be summed up in one line. That is,

‘First they lure customers, then they get them addicted and then they pull out the bait of unbelievable deals and return policies.’

Yes, after making the year gone by all about crazy discounts with ‘no questions asked’ returns, ecommerce giants are now changing their return policies in order to cut down their losses.

Need to change return policies

Several estimates calculated after 31 March, 2015 suggest, goods worth between $800 million to $1 billion were returned by Indian online shoppers last year. For most etailers 6-8% is the average percentage of goods that are handed back but for some the rate can go up to 25%. This contributes largely to the total loss and non-productive expenses incurred. Reasons such as additional logistics cost, receiving used products or things bought & returned for no concrete reasons has compelled online portals to take this step.

What’s changed?

Say bye bye to ‘no questions asked free return and refund’. Because, return policy of each category, product and seller varies on each portal after alterations. For instance on Flipkart, products bought from sellers with ‘Flipkart Advantage’ badge can be returned/replaced within 30 days of delivery. Whereas, for other sellers the timeframe is only 10 days. In case of some new sellers/categories, no return, exchange and refund apply.

Until now, only sellers were getting rated for their service. But many etailers have started rating buyers and are studying product return patterns to screen those who are exploiting their return policies. They flag customers with a record of high return rate and grade them accordingly. One Amazon spokesperson informed, “We have designed systems and processes that immediately detect patterns that predict misuse (of returns policy) before it happens. Some customers might want to misuse this privilege and we take that very seriously. Our systems keenly look out for indicators of misuse.”

Will it affect customers’ attitude towards online shopping

We bet it will. The importance of customer friendly return process can’t be ignored. Many would find scrutinizing, rating them as a shopper and making it public to be intrusive. Latif Nathani, Vice President of eBay said, “Earlier the buyer ratings were public on eBay but currently we keep them for internal monitoring.” Good move we say.

While from the business point of view, taking measures to reduce loss and filter buyers who abuse their power is not wrong. But in the time when online delivery blunders are a norm and authorized sellers are selling fake and damaged products, screening sellers to reduce return and grievances is the step that needs to be implemented first.