A return too far

This is how it starts.

You love shopping online. You’re not always super-careful about how many items you return because you believe in the no-hassle returns promise made by the retailer.

So you buy that camera to test it out. Some of the features are buggy, and you send it back. You buy a blazer in three different sizes but none of them fit right, so you return them all. You take a chance on that electronic device that is ridiculously cheap and it turns out to be junk. You send that back, too.

If you’re an Amazon shopper, you may get an e-mail warning.

Hello,

We’re writing to apologize for the number of issues you’ve experienced with your shipments. Your correspondences with us indicate you’ve required refunds on a majority of orders for a number of reasons.

Through the normal course of business, the occasional problem is inevitable. However, you seem to have had an unusually high rate of problems in your account history.

When unusual account activity such as this comes to our attention, we’ll evaluate each account on a case-by-case basis to determine if additional action is necessary, including closing the account. We’d prefer to work with you to avoid that inconvenience, as we do value your business.

Continued failure to comply with our policies may result in the removal of both your Amazon.com buying and selling privileges.

Stories of being banned from Amazon populate the web. But Amazon isn’t the only retailer that bans customers who return too many items.

Even Nordstrom — a company that has built its brand on customer service and has a generous return policy — is not afraid to say that it sometimes severs relationships with customers who return too many items.

“We do have occasions where customers have excessive returns, to the point where it’s clear they’re disappointed or frustrated with us and we in turn are frustrated with our inability to serve them properly, so it’s best that we part ways,” said Nordstrom spokesperson John Bailey.

Sears Canada also has a generous returns policy. And limits. “We monitor high returns and can disable certain customer profiles from being able to have orders placed from them in some cases; this would be after we investigate and determine that there is fraudulent activity,” said Vince Power, a spokesman for Sears Canada.

Sears has also taken steps to cut down on the number of returns in apparel, an area where returns are high and the value of items drops steeply the longer they remain unsold.

A spokesman for Hudson’s Bay declined to comment on the policies in effect at its stores.

So did Amazon. “Beyond pointing you to the Amazon.ca Returns Policies, we wouldn’t have anything additional to share,” wrote Amazon spokesperson Katie McFadzean in response to questions from the Star about the policy.

Lucas Bean, 40, a California entrepreneur who describes himself as an Amazon fanboy, is one person who says he run afoul of Amazon’s return policy.

“I was basically an Amazon-brand ambassador,” says Bean, who was an early adopter of on-line shopping.

He says his problems began in 2015, after he moved and Amazon continued to deliver parcels to his former address. He bought a video camera (from Amazon) to prove that deliveries weren’t being made to his new home.

He refused to accept delivery of a damaged television. He returned a Samsung bluetooth headset because he thought it was counterfeit.

He admits to returning some things that weren’t worth returning — like a $5 bag of plastic spiders he bought to decorate his home on Halloween and a $9 dryer hose that seemed used.

By the time his account was closed, Bean said he was spending more than a $1,000 a month and was returning some products each month. “I’ve returned quite a few items that were poor quality,” says Bean. “But I have the right to return something that is broken.”

He was shopping on Amazon at 11:45 the night before his account was cancelled. He couldn’t log in the next day. He was told all active orders had been cancelled and that the ban was permanent.

He tried to open a new account a few weeks later, but Amazon banned that one too.

Real Estate broker Neil Khatib says he has been warned twice by Amazon about returning too many items, despite the fact that many of the returns were due to errors on Amazon’s part.

About 10 months ago, Khatib ordered a pair of shoes that were the wrong size, then the wrong colour, and then he was sent the wrong shoe entirely.

“I had already read about people getting banned and warned,” wrote Khatib, in response to questions from the Star. “I literally told the Amazon rep, ‘I don’t want to get banned because I’m having to exchange the shoe so many times.’ ” He says the rep apologized and told him he could return them.

Two days later, Khatib received an e-mail from Amazon saying that he had returned too many items and needed to be careful. Everyone in his household, including his wife and father, received the e-mail, says Khatib.

He’s only returned two or three things since then, including one item that was not in a box. He received a second warning notice.

His efforts to explain have been met with generic e-mails and in chats with representatives on the site, he has been assured there are no flags on his account.

Still, he’s worried.

“It just kind of stinks that when it is out of your control, there is still nothing you can do and Amazon doesn’t offer up any solution to help you to minimize the issues,” he says.

The retail cost

Returns create multiple costs for retailers. Some pay for return postage, and even if they don’t, restocking items costs money. If items are sold out of season, they have to be sold at a reduced price, or sold in bulk to a re-seller, liquidator or jobber, or at an affiliated clearance warehouse.

The items show up at flea markets, dinged or worn-looking or without a box, and some brands would rather trash their returned goods than have that happen.

Last year, $290 billion of sales were returned in the United States and Canada, according to statistics from The Retail Equation, a firm that provides return-optimization services to retailers.

Eight per cent of purchases from bricks-and-mortar retail sales are returned. But up to 30 per cent of e-commerce exchanges involve a returned item, and e-commerce sales, though still a relatively small proportion of sales for most traditional retailers, are growing at a faster rate than are in-store sales.

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An estimated 10 per cent of returns are thought to be either fraudulent or a misrepresentation of the facts — a fake receipt or someone returning something bought a year ago instead of yesterday, says Stephen O’Keefe, a loss prevention specialist with the Retail Council of Canada.

What many people don’t know is that such scams could result in criminal charges. “If you buy a new television and put the old one into the box and try to return it, that’s a fraud,” says O’Keefe.

Some retailers are prepared to incur the high cost of returns if it means leading the field in customer relationships, positive reviews and word-of-mouth advertising.

“If you order two, they know you’re going to be sending one back,” says O’Keefe. “They know that and they accept that — they want to be positioned as first in class.”

Thriving on returns

This is how it ends.

A tractor-trailer drives into a warehouse near Pearson Airport, filled with appliance returns from retailers and manufacturers across the GTA.

Staff at ReturnTrax comb through it, grading the merchandise. Units that are deemed unsellable are set aside to be harvested for parts. Computer boards and compressors from unsellable units are removed and filed on shelves to be used for repairs. The metal is sold for scrap.

Appliances that can be resold are tested to ensure they are fully operational. They are set aside for sale in bulk, or to individual buyers, at a minimum of 30 per cent off retail.

CEO Craig Stevens, who founded ReturnTrax 10 years ago, says he often doesn’t have time to move product from the warehouse into the storefront. Customers buy from the warehouse floor.

Some manufacturers and retailers don’t like the idea of their products being sold at a deep discount in a variety of marketplaces, but Stevens says there’s little overlap between what he calls A-line and B-line shoppers.

“There’s A-line shoppers who go to brand-name stores, and B-line shoppers. B-lines are the flea markets, the tent sales, the pop-up sales. There’s limited cross-over between the two. The B-line shoppers are always looking for the discount. They don’t go to A-line stores.”

Even if a retailer has warehouses where it can sell returned goods, it’s sometimes more efficient to hand the job over to someone else, says Stevens.

A-line stores are efficient at selling to the A-line market but don’t do as well when they try to sell off their returned items, even in their own warehouse settings.

“Guess what sells the quickest? The really good stuff,” says Stevens. “The store ends up looking like a junk store because all the good stuff is gone . . . there’s a whole art form to moving B-product.”

Clothing, which ReturnTrax does not handle, travels a different route — often to clearance locations, including those along Orfus Rd., just south of the swank Yorkdale Shopping Mall.

Along Orfus, banners strung across buildings advertise big deals inside, but much of it is low-quality, tired, or not much cheaper than an end-of-season sale at a department store.

Howard Rosenberg founded B-Stock Solutions in the U.S. in 2009, dealing in returns and overstock from some of the country’s largest retailers, including Target and Costco.

His service connects buyers with retailers via a website so products don’t have to be moved to an intermediary location. In an operation similar to eBay, certified buyers can shop online and bid on lots, ranging from six pallets of wine and beverage coolers by Danby to 186 bathtubs and toilets from The Home Depot or a truckload of furniture and home décor products from Wayfair.com.

“Generally speaking, we want to sell the merchandise from where it sits. Nothing sucks the dollars out of the recovery more than transporting the goods multiple times,” says Rosenberg.

Their buyers run from small businesses and flea markets to giant liquidators. Buyers apply from the site and are approved for purchase by the retailer.

“The return rates in e-commerce are higher than the return rates in bricks-and-mortar. People are buying sight-unseen; it’s natural that there is going to be a higher return rate,” says Rosenberg, who doesn’t expect the trend will abate.

With e-commerce growing faster than sales at bricks-and-mortar stores, he doesn’t think the returns market will shrink any time soon.

“I don’t see any change to the relaxed return policies happening. Whoever decides to move first doing that is going to put themselves at a significant disadvantage,” he said.

“I think the more likely move will be building the cost into pricing rather than eliminating the benefit.”

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