Return Fraud’s Impact on Retail Sales and E-commerce Returns Highlighted in Report from Appriss Retail

Study shows merchandise returns account for $351 billion in lost sales; almost as large as the national deficit

Appriss Retail recently released its 2017 Consumer Returns in the Retail Industry report, which analyzes results from the National Retail Federation’s 2017 Organized Retail Crime survey to provide insights for retailers to minimize the effect of return fraud and abuse on their business.

According to the survey, total merchandise returns account for more than $351 billion in lost sales for US retailers. This size is overwhelming; merchandise returns are close to the estimated 2017 federal budget deficit of $400+ billion. Retail fraud and abuse accounted for $17.6 to $22.8 billion in the United States. And return fraud averages 9.4 precent of all buy-online-return-in-store (BORIS) e-commerce returns.

“It is critical to understand how returns and return fraud reduce net sales and contribute to total loss— clear causes of retail performance issues,” said Krishnan Sastry, president of Appriss Retail. “The results within this report offer the industry’s best view of the subject of merchandise returns, as well as potential fraud and abuse.”

The extreme loss of profit is causing retailers to offset the negative business impact by raising prices and reducing costs, which often means a loss of jobs. Last year alone, return fraud cost US retailers and workers between 596,000 and 775,000 jobs. The cost to each state is steep also. Retail revenue losses are costing states a total of $1.1 billion to $1.4 billion in lost sales taxes.

Appriss Retail’s report evaluates the following:

  • Return Rate by Retail Category;
  • Analysis of Return Fraud by Receipt and Channel;
  • Loss Impact of Return Fraud and Abuse;
  • Holiday Returns and Return Fraud;
  • Lost Tax Impact and Jobs due to Return Fraud;
  • Examples of Return Fraud.

Preventing fraud and abuse is a major challenge, but retailers are also looking to improve the shopping experience and differentiate the consumer experience during the return process. The ability to offer e-commerce consumers more flexible and lenient returns, while still mitigating the risk of fraud and abuse is critical. Appriss Retail can help address such challenges through a return optimization solution called Verify®. It is designed to distinguish and deter the one percent of consumers who are fraudulent and abusive, allowing the remaining good 99 percent to enjoy a great shopping experience.

For a complete copy of the report, visit http://info.apprissretail.com/consumer-returns-2017.

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