Profits of UK retail SMEs damaged by online shoppers abusing free returns

The ecommerce explosion means that consumers have many more opportunities to secure bargains at their convenience, particularly when the retail landscape is so fierce for businesses competing with each other.

However, research from Barclaycard has found this has resulted in a rise of “serial returners”, online shoppers who over order on purpose to capitalise on free returns, which is stunting growth of retail SMEs.

Some 31 per cent of companies said that the returns process is damaging the profit margin, with the rate of returns increasing over the past year. Seemingly the problem is only set to persist too, with a 14.1 per cent digital spending increase year-on-year, versus just 1.1 per cent for store sales.

According to the study, 30 per cent of shoppers over order on purpose and return unwanted items, while 19 per cent said they buy multiple versions of the same item to decide what goods they want to keep at home – knowing that returns can be made simply and without charge.

“Today’s time-pressed shopper expects the process to be fast, easy and free – and that applies to both buying goods as well as returning them,” said Sharon Manikon, director of customer Solutions at Barclaycard global payment acceptance.

“Faced with more choice than ever before, alongside a range of different clothing and shoe sizes, it’s hardly surprising that this new breed of online shopper – the serial returner – is starting to emerge.”

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Indeed, 58 per cent of consumers admitted a returns policy will impact the choice to make an online purchase and 47 per cent added they would not order online if it would cost them money.

Profits aside, 52 per cent of SME retailers added that managing returns is negatively affecting the day-to-day running of the business and they admitted they’re often left looking for ways to make up the revenue difference.

Charging for delivery is a solution for 31 per cent of online businesses that offer free returns, while a fifth increase the cost of products.

Manikon encouraged companies to advance website support to help cut down on the likelihood of returns: “Online spending will continue to rise and the need to keep pace with customer demands presents a dilemma for the UK’s SMEs, who need to protect their bottom line, but also compete with the larger players on the high street,” she said.

“Fortunately there is light at the end of the tunnel, with many ways to streamline the returns process. From developing universal sizing to offering virtual dressing rooms, the key for SMEs is to determine which solutions work best for them to ensure they don’t lose out to their more savvy competition.”

The way we spend money on items is set to change even further – Android Pay is now live in UK with Starbucks and Deliveroo signed up as reward partners

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