Physical and online retail returns – how do they work?

by Andrew Bell

 

The Laws

Shoppers on Buchanan Street in GlasgowAccording to UK law, a brick and mortar retail branch is only obliged to accept a customer return if the item is faulty. The law is less lenient for online transactions however; the Consumer Contracts Regulations dictates that buyers must be allowed 14 days to return the item after they receive it whether it is faulty or not, and that sellers or retailers must issue a refund within 14 days of the item being sent back.

The difference in UK law is due to the differing natures of the transactions. In a brick and mortar context, consumers are able to see the item in person and assess for themselves if they want to commit to a purchase. Online however, items are represented by images and words, meaning there is much more room for misunderstanding and accident due to the postal process.

The Processes

Have you ever wondered what happens to returned items and how much of a loss retailers tend to make throughout this process? When you return an item, the way it is processed depends entirely on the condition of the item when it is returned.

1. If the item is in perfect condition… then the item tends to be examined, re-added to inventory and sold as new.

2. If the item or packaging is compromised… then it will be refurbished at either the manufacturer’s or the retailer’s regional centre, meaning parts of the item are replaced with brand new factory pieces. Alternatively, these items can be sold to regional third parties known as liquidators, organisations that buy items from retailers in bulk and at a heavily discounted price and sell these difficult to move items for slightly less than usual.

3. If the item is broken or damaged… the retailer may either resell it as ‘faulty’ at a heavily discounted price, dispose of it for credit from the manufacturer, or fix it and resell it as “refurbished”.

The Future

Consumer expectations surrounding returns have been changing in the face of generous e-commerce policies, and brick and mortar retail branches have had to adapt to accommodate these. Despite the associated cost and increased scope for return theft, retailers now understand more than ever that refusing a return can be disastrous for their brand, often offending customers who spread these experiences via word of mouth.

As a result, retailers now tend to accept returns within 14 – 30 days of purchase whether items are faulty or not. Indeed, companies like Apple have gone a step further, no longer requiring proof of purchase for every return but instead using company records to further streamline the process.

At a time when physical retail has been losing revenue to e-commerce sites likes Amazon and Alibaba due to competitive pricing and increased convenience, it will continue to be essential that all brick and mortar retailers provide more generous returns policies.