The convenience of hassle-free returns for online purchases is undergoing a notable change. Leading retailers such as Abercrombie, H&M, J.Crew, and Macy’s are introducing charges for returns, a move aimed at mitigating the financial burden of this process, according to recent reports.
The expense of handling returns for online merchants is substantial. They frequently bear the shipping costs and may need to offer the returned items at reduced prices or absorb losses. Additionally, the logistical demands of processing returns are resource-intensive.
National Retail Federation data reveals that nearly 17% of all purchased goods were returned last year, including a significant 17.9% of items bought during the holiday season. In response, 44% of businesses reported plans to recruit extra seasonal staff for handling these returns.
Initially, free returns were a strategic offering to boost consumer confidence in online shopping. However, with the increasing prevalence of digital commerce, retailers are reassessing this approach.
A study by Happy Returns, a returns management firm under UPS, indicates that a staggering 81% of retailers now impose some form of return charges.
Amazon, for example, has implemented a $1 fee for returns processed at UPS Stores when a Whole Foods, Kohl’s, or Amazon Fresh location is more conveniently located. The company is also identifying products with high return rates to guide consumer choices better.
Other retailers are adopting strategies like charging for return shipping or imposing restocking fees to balance the costs associated with returns.
The total value of returns in 2022 reached $816 billion in lost revenue for U.S. retailers. For each $1 billion in sales, an average retailer faces $165 million in product returns.
Beyond financial aspects, the environmental impact of returns is significant. The transportation of returned goods adds to carbon emissions, and some items even end up in landfills. To address this, some companies are opting to issue refunds without asking for the items back, encouraging customers to donate or repurpose them.
For instance, Chewy often advises customers to donate returned items to local animal shelters, and Temu, despite offering free returns, sometimes permits customers to keep undesired products to avoid return costs.
With a staggering $63.2 billion spent online last November, the volume of returns was expectedly high. However, with the new return fees, some shoppers might find renewed value in gifts they would have otherwise returned.