The United States saw a significant portion of its retail purchases returned, with just over 16% of online purchases were returned. According to a study by Statistica, the issue has escalated in 2021-2022 as the volume and processing cost of returns increased dramatically, resulting in many merchants large and small overhauling their policies.
This figure is substantial when considering the total volume of e-commerce transactions and reflects a broader challenge within the industry. The cost of returns for U.S. retail reached an astounding $817 billion, and online retail accounted for $203.22 billion.
The implications of these findings are multifaceted. For retailers, returns represent a logistical challenge and a financial burden. The process of handling returns, which includes receiving, unpacking, and restocking or redirecting items, can be costly. Moreover, the environmental impact cannot be overlooked, as the carbon footprint associated with returns is significant.
Retailers have been responding to these challenges in various ways. Some have begun to change their return policies, moving away from free returns and introducing fees to mitigate the costs associated with reverse logistics. Others have adopted "returnless" or "keep it" policies for low-value items where the cost of processing a return would exceed the item's value.
Return-policy Examples
Following are examples of new shipped return policies as reported by various media sources.
- Abercrombie & Fitch charges a $7 fee.
- American Eagle Outfitters deducts $5 from the refund.
- Foot Locker deducts $6.99 from refunds on all returns made by mail.
- J.C. Penney deducts $8 from all refunds on returned online purchases made by mail.
- J.Crew deducts $7.50 from the refund for shipped returns.
- Kohl’s requires customers to pay for all shipping for returns.
- Lands’ End deducts $6.95 from the refund credit.
- L.L.Bean charges $6.50 for returns and exchanges through U.S. mail unless the customer used an L.L.Bean Mastercard for the purchase.
- Pacsun deducts $7 from the refund.
- REI deducts $5.99 from refunds for packages of standard size and weight.
- Shoe Carnival deducts $6 from all refunds on online returns sent by mail.
- Urban Outfitters deducts $5 from all online orders returned by mail.
- Zara charges for returns at a drop-off point — $3.95 in the U.S.
These policy changes aim to balance customer satisfaction with the economic realities of returns. A generous return policy can encourage consumer spending and foster loyalty, but it could negatively affect a retailer's bottom line if it becomes too costly or inconvenient. As such, businesses must navigate these decisions carefully to maintain customer relationships while also protecting their profitability.
