Why “Buy Now, Pay Later” (BNPL) payment options lead to higher returns. How to identify and manage serial returners. Strategies for dealing with customers with high return rates.

In today’s competitive e-commerce landscape, customer behavior plays an important role in shaping return rates. While a seamless returns process can foster customer loyalty and repeat purchases, it’s equally important to understand what drives high return rates and how to manage them effectively. From “Buy Now, Pay Later” (BNPL) options encouraging more returns to strategies for managing “serial returners”, this blog explores how e-commerce businesses can strike the right balance between customer satisfaction and operational efficiency.

Why “Buy Now, Pay Later” payment options lead to higher returns

The rise of “Buy Now, Pay Later” (BNPL) payment solutions like Klarna, Afterpay and PayPal has revolutionized the online shopping experience. Offering flexibility and removing purchase barriers, BNPL has quickly gained traction. However, this payment model also comes with unintended consequences for retailers: a significant rise in return rates.

1. Reduced perceived risk

With BNPL, customers can order products without immediate financial commitment. This reduction in perceived risk makes impulse buying more frequent. Shoppers feel emboldened to order multiple sizes, colors, or styles of the same product, intending to return what doesn’t fit or suit their preference. This practice, often referred to as bracketing, directly inflates return volumes.

2. Higher purchase volumes

BNPL encourages customers to spend more, as they can split payments over time. While this boosts order value initially, it also increases the likelihood of buyer’s remorse or mismatched expectations, which leads to more returns.

3. Delayed payment psychology

Because customers haven’t “felt” the financial impact yet, they may view returns as inconsequential. This delay in payment triggers a more relaxed approach to shopping, which ultimately results in increased returns.

Solution: Retailers can counteract BNPL-driven returns by:

• Offering detailed product descriptions, images and videos to manage customer expectations.
• Highlighting size guides, virtual try-on tools and user reviews to minimize bracketing.
• Implementing a streamlined (free) exchange process for size or style mismatches.

Returnista’s automated returns platform can further help reduce unnecessary returns by encouraging (free) exchanges instead of refunds—keeping customers satisfied while retaining revenue.

How to identify and manage serial returners

Serial returners are customers who habitually purchase products with the intent to return most or all of them. While they represent a small fraction of customers, their behavior significantly impacts return logistics, sustainability and profitability.

Identifying serial returners

To manage serial returners effectively, it’s crucial to identify them first. Here’s how:

1. Analyze return data: Leverage analytics to track return rates by customer. High-frequency returners with low purchase retention are often serial returners.
2. Monitor patterns: Look for trends like consistent bracketing, repeated returns of the same product category or excessively short return turnaround times.
3. Flag abnormal behavior: Implement systems to flag customers exceeding predefined return thresholds (e.g., >70% return rate).

Managing serial returners

Once identified, serial returners can be managed using targeted strategies:

1. Adjust return policies: For habitual returners, consider implementing stricter return policies such as shorter return windows, return fees or offering only store credit instead of cash refunds.
2. Engage with the customer: Reach out to understand why they are returning so frequently. Is it due to product quality, incorrect sizing or shopping habits? Personalized communication can provide valuable insights and resolve issues.
3. Promote exchanges over refunds: Offering incentives, like free exchanges or discounts for keeping products, reduces refund-driven returns.
4. Encourage responsible shopping: Use clear messaging to discourage bracketing, such as, “Help us reduce waste” or “Select your size carefully to avoid returns.”

Example in action: Returnista’s platform enables retailers to automate exchanges, minimizing refunds and managing high-return customers more effectively—while still providing a positive customer experience.

Strategies for dealing with customers with high return rates

Customers with high return rates can strain operations, increase costs, and hinder sustainability goals. However, addressing this challenge requires a thoughtful, customer-centric approach. Here are strategies to balance business efficiency with customer satisfaction:

1. Implement Smart Returns Policies

A flexible yet structured returns policy can help control return rates while maintaining customer trust:

• Fee-based returns: Introduce small return fees to discourage frivolous returns without deterring genuine customers.
• Store credit incentives: Offer store credit (with a bonus) instead of refunds to retain revenue and encourage future purchases.

2. Enhance product information

Many returns stem from mismatched expectations. To mitigate this:

• Provide high-quality images, videos, and customer reviews.
• Use augmented reality tools for virtual product trials.
• Share size charts and fit recommendations based on past purchases.

3. Optimize Customer Support

Proactive customer support can resolve return intentions before they materialize:

• Offer live chat or virtual assistants to address sizing, product fit, or quality concerns before purchase.
• Resolve dissatisfaction with partial refunds or replacements to avoid full returns.

4. Leverage technology to streamline returns

Automated solutions like Returnista simplify the return process while gathering insights on customer behavior. By analyzing return trends, retailers can:

• Identify product quality issues leading to returns.
• Recognize customer segments with high return tendencies and adjust strategies accordingly.
• Encourage exchanges and retain more revenue.

Conclusion: a balanced approach to returns management

Customer behavior is at the heart of return rates. While “Buy Now, Pay Later” options and serial returners can inflate returns, thoughtful strategies can help mitigate their impact. By enhancing product information, implementing smart return policies, and leveraging automation, e-commerce businesses can reduce return rates without compromising customer satisfaction.

Returnista’s returns platform empowers retailers to take control of their post-purchase customer journey. From automating exchanges to providing valuable return insights, our solutions help lower return rates, improve customer loyalty, and maximize revenue retention.

Want to optimize your return management process?
At Returnista, we simplify returns logistics while helping you manage customer behavior effectively. Our software automates returns, promotes exchanges, and ensures your customers enjoy a seamless experience.

Schedule a demo today to discover how Returnista can transform your returns process—turning challenges into opportunities for growth.

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