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When one of Bill Turner's on-line customers ordered three pairs of the same shoes in sizes 7, 7½ and 8, the vice-president of merchandise for Sears Canada Inc. didn't raise an eyebrow.

When two of the three pairs came back in the mail a few weeks later, Mr. Turner was equally unfazed.

Sears immediately reimbursed the customer -- as it does for all of its on-line and catalogue returns -- and sent the two unwanted pairs of shoes back to the inventory bins, without so much as a question.

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"That's what people do when they go to a shoe store. They want to find the perfect fit," says Mr. Turner, who also runs Sears Canada's on-line store, which has been selling products since 1998.

"We let our customers do the same on-line because we get the other pairs back."

But the Sears vice-president knows that few other Canadian dot-com companies can afford to be so cavalier about customers who buy up to three different sizes and return the ones that don't fit.

This behaviour, dubbed bracketing, is proving to be costly and frustrating for many retailers.

"Many retailers are telling us that consumers are using the Internet as a virtual dressing room," says Michael Szego, an e-commerce consultant at J.C. Williams Group in Toronto. "It's a customer trend, but a pain in the butt for retailers."

He says the word bracketing comes from the catalogue industry and refers to the act of buying around a product.

It's too early to tell whether or not bracketing will end up being more pervasive on-line than in the catalogue industry, he says.

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Toronto Internet consultant and author Rick Broadhead refers to the activity as e-loading (from freeloading), which "is the case when the customer is too empowered and has too much control."

Indeed, the rate of returns for on-line purchases far exceeds that of shopping done in physical stores. The Internet-driven shopping habit has resulted in an average on-line return rate of about 25 per cent for e-tailers. The burden is even greater for Internet apparel and shoe companies, which face return rates as high as 40 per cent.

In contrast, the return rate for physical stores ranges from 3 to 10 per cent, with apparel and shoe stores at the high end of the range.

However, on-line retailers aren't totally helpless. They can reduce their high rates of return by charging customers for returned items and installing sizing and colour correction software on their Web sites, Mr. Broadhead says.

Bloomingdales.com is one company that has loaded its Web site with software that provides more information and visuals in the hope of reducing returns, says Susan Harvey, the firm's senior vice-president of management.

The site offers colour software to ensure red looks like red and not plum. It also has clothes-sizing software and "zoom technology," which enables users to inspect every detail of a product.

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Ms. Harvey says the sizing software, called Style Valet, has boosted the number of browsers-turned-buyers by 6 per cent.

But, she adds, it's too early to tell whether the software has reduced returns at the on-line store.

The Sears site has a different tool to combat returns. The retailer is in the enviable position of having a well-established system for handling returns because of its experience in the catalogue business.

And the retailer has had to deal with the bracketing phenomenon in its catalogue business for years.

Sears, which Mr. Turner says has a "whopping" rate of return for on-line purchases, "well above 20 per cent," has a delivery truck service, 110 stores and more than 2,000 package drop-off and pick-up points across the country. "We invested heavily years ago because we knew we'd always have a huge return rate of goods," he says.

As a result, the company resells 97 per cent of its returns, which are first taken to the Sears "hospital" for restoration.

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But most e-tailers, especially pure-play stores that lack a physical presence, are being hit by the logistical challenge, says Joe Greene, director of telecommunications and Internet research at International Data Corp. (Canada) Ltd.

Gearunlimited.com Inc., a Mississauga sports gear e-tailer, says high levels of returns has forced it to dramatically reduce the number of clothing and shoe styles it offers.

On-line companies often pay the cost of picking up the unwanted items and delivering them to a warehouse or physical store. E-tailers have to pay for restoring and repackaging the returned goods and, if destroyed, incur the cost of lost sales. And there is the administrative cost of handling returns, which includes reimbursing customers' credit cards.

"Returns are a big problem. They have to be affecting the companies' bottom lines," Mr. Greene says, adding that it's too early to track returns' financial impact.

But apparel retailers are well aware that returns are a problem.

"Returns are certainly an issue for us," says Len Nicolas, director of information technology for Nygard.com. "This is fashion. What looks good on the Internet may not look good on the person." To discourage returns, Nygard.com, which has a 40-per-cent return rate, does not pay shipping fees for the returns.

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"The main main reason for returns is that the size didn't fit. The customers usually want a larger size, but we don't pay for that," Mr. Nicolas says.

But many e-tailers believe that to be competitive they must offer flexible return policies and cover shipping costs.

Viva Care Health E-Store Inc., an on-line health and beauty store that has been open since March, pays the cost of returns by sending self-addressed envelopes to its customers. The e-store says it has had only one returned item.

The company's president, Brett Holtby, says selling well-known brands help to reduce returns. And people are less likely to return personal items such as condoms and incontinence pads, he adds.

However, Vivacare.com has no physical stores to use as pick-up and drop-off points for shoppers, so it built a warehouse in Richmond Hill, Ont.

It also pays to use a depot for e-goods in downtown Toronto operated by Empori.com. On-line customers can pick up and return products at the depot, rather than use a delivery service to their homes or work.

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HMV.com also uses Empori.com as one of its delivery options.

However, because HMV.com offers its customers the opportunity to sample songs over the Internet, people tend to know what they are buying before it gets to their front door, says Frank Koblun, director of consumer e-commerce for HMV.com.

As a result, the music store has a return rate of 10 per cent -- the same as its physical stores.

Third-party arrangements help pure-play stores to some extent, as do on-line services such as sizing software and music sampling.

However, Mr. Turner says being able to return bought items is a customer's right, and companies must ensure that right is protected.

Allowing bracketing, he says, is integral to the success of on-line businesses.

"When a customer buys three sizes of the same shoe, it proves the customer is a serious shopper. We want serious shoppers."

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