E-commerce fashion platforms scammed by fraudulent product returns
A group of engineering students from Kanpur managed to trick a number of India’s largest fashion e-commerce retailers including Flipkart and Myntra into paying refunds for fraudulent stock exposing the problem of returns.
Over a two month period, a group of students ordered large numbers of clothing from e-commerce businesses including Flipkart and Myntra. After taking off the labels and sewing them into inferior quality replica garments, they then returned the imitation clothing, citing poor fit as the reason, and collected the refund. However, after noticing, both Flipkart and Myntra, as well as many other fashion retailers such as Voonik, have reported that this is a big problem in the online fashion market.
Fraud and damaged originals account for approximately ten percent of product returns in the Indian fashion e-commerce market. Industry estimates state that 30 percent of all clothing ordered online is returned and this adds up to logistics costs of around 870 crore rupees (approximately 130.7 US dollars) every year. This recent scandal is therefore only one example of a greater problem.
The problem on the high return rate of garments purchased online has led many online businesses to search for ways to counter this with artificial intelligence technology. Myntra, which is known for their no-questions return policy, is now looking at customers’ history to check in case they could have made a mistake when ordering. “Based on the customer’s purchase and returns history, we have notifications to inform them in case they are buying the wrong size within a different brand,” said Myntra’s Chief Executive Ananth Narayanan. “This in-house technology was launched a couple of months ago and we expect this to lead to a 2% drop [in returns].” As many online fashion retailers are pushing hard towards profitability in a competitive market, finding a way to reduce fraud and returns will be increasingly important moving forward.
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