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September 2013

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Q&A: Michael Colpitts on Oracle Retail Returns Management—Balancing Customer Service and Fraud Prevention

Fraudulent returns totaled nearly US$9 billion in 2012. Yet a pain-free returns process is also a vital part of the customer service experience, which means denying legitimate returns presents a serious business risk. The goal is to enhance the customer experience while protecting the business from theft.

We asked Michael Colpitts, senior manager, Oracle Retail, to shed light on this dilemma—and how innovations in Oracle Retail Returns Management enable retailers to achieve the right balance between fraud prevention and excellent customer service.

Q. What are the hazards of having an unbalanced returns policy, whether too strict or too lenient?
A. It is estimated that more than 13.4 percent of nonreceipted returns are fraudulent, so we are talking about huge amounts of money. But you can't just deny all nonreceipted returns. Studies show that a customer's experience of returning merchandise is a key decision point in building loyalty. So on one hand, you have to factor fraud-cutting into the bottom line, and on the other hand you have to consider how poor customer experiences cuts into the top line.

Q. What are the risks of inaction?
A. As more and more retailers come up with effective strategies for combating returns fraud, criminals are simply going to move next door to the retailer who doesn't have systems in place. So for those who do not act, losses will inevitably accelerate.

Q. Why isn't a single set of returns policies good enough?
A. It’s fine to write a policy statement and distribute it throughout your stores, but actually achieving compliance is another matter. That’s where automation becomes really important. Our solution offers the right guidance during the execution of returns, so policy is reinforced and knowledge of it becomes widespread among workers.

Q. How does Oracle Retail Returns Management help reduce the risk of fraud, even for transactions that lack a receipt?
A. Our solution is built on a central transaction repository that captures every interaction with a particular customer. This is key, since a customer’s return history is invaluable in determining the likelihood of fraud. Just as important, the repository actually enables you to convert a nonreceipted return into a receipted return, since you can actually look up the original transaction right at the point of service.

Q. How does Oracle Retail Returns Management help retailers achieve the right balance between fraud prevention and customer service?
A. We give retailers the ability to create flexible returns policies. Using Oracle’s solution, even the most complex policies are easy to create and manage, leveraging 40 built-in rules that evaluate the return. These rules incorporate all available criteria to determine how the return should be handled. Factors include whether there is a receipt, the customer’s return history, store location, the item or brand being returned, the condition of the item—and much more.

Find out more about Oracle Retail Returns Management.

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