Why you need to analyze your SMB's merchandise returns while being transparent about it

A recent AP report brings to light how big retailers are using merchandise return data to reduce the costs associated with fraud. For years retailers have been analyzing data on merchandise returns to identify patterns of fraudulent activity. I know from personal experience that fraudulent returns can be a big problem for retailers. Just because criminals break the law does not mean they are not smart enough to devise simple to complex schemes that can allow some to make a decent living. An analysis I conducted a few years ago uncovered one such scheme in which people took advantage of the infrastructure disconnect between online promotions and in-store returns. This risk represented huge potential costs to the company.

Merchandise returns analysis can deliver actionable insights

I'm using this article to bring up two points for SMB retailers. First, if you are not analyzing merchandise return data then you may be missing opportunities to reduce costs to your business. While the article focuses on reducing fraudulent returns, the data can be analyzed for other insights as well. For example, if a product has a higher return rate than others it may be a signal for inferior quality. Pushing the vendor to improve quality or testing products from other vendors may save the business some significant costs. There are reasons consumers return purchases and understanding those reasons can give you greater operational intelligence.

Transparency is important for consumers

The second point is that if you are collecting return data in your SMB then be transparent about it. Update your privacy and return policies to highlight what is being collected and why. Call attention to it at the point of sale and connect the dots to how it helps keep costs and thus prices down. While privacy is an important factor for consumers, I think most understand that you have a business to run. Hiding things naturally feels shady even if the cause is noble and logical. So promote it and build trust.