Retailers are grappling with the high cost of returns, which reached an estimated $816 billion in lost revenue in 2022. The challenge is exacerbated by the fact that online purchases have a higher return rate—about 30%—compared to just 8.89% for brick-and-mortar stores.
According to goTRG 2022 report, found that 60% of retailers are making bold changes to their returns policies to help mitigate the high cost of processing their eCommerce returns. To mitigate these losses, some retailers have started charging return fees, with about 40% implementing such charges in 2023, up from 31% in 2022.
The trend towards charging for returns is also reflected in the actions of major brands like Macy's, Abercrombie, and J. Crew, which have introduced shipping fees for mail-in returns. Even Amazon, known for its customer-centric policies, has adjusted its stance by planning to assess a returns processing fee for high-return rate products starting June 1, 2024.
Another strategy retailers are employing is the adoption of "keep it" or "returnless" policies, particularly during the holiday season. This approach allows customers to keep the unwanted items while still receiving a refund, especially when the cost of processing a return exceeds the value of the product.
Despite these changes, some retailers continue to offer generous return policies, with periods extending up to 365 days. This demonstrates a balance between managing costs and maintaining customer satisfaction. However, the overall trend indicates a tightening of return policies, with retailers shortening return windows and exploring ways to reduce the financial impact of returns.
