Retail Returns Have Reportedly Jumped 60% Since 2012
There’s good news and bad news for online retailers this year.
The good is consumers are expected to spend almost $241 billion on eCommerce purchases during the holiday season, the Financial Times (FT) reported Thursday (Dec. 26), citing data from Adobe Analytics.
The bad news? It’s easy for consumers to return the items they purchase, something that has become — in the words of FT opinion writer Pan Kwan Yuk — “a multibillion-dollar problem for the retail industry.”
Online purchases have for years had higher rates of return than brick-and-mortar purchases, as consumers who can’t see or try on an item before buying are more likely to have a change of heart, according to the report.
Consumers in the United States returned 17.3% of their online purchases in 2023, versus 10% for in-store items, the report said, citing National Retail Federation (NRF) figures. Returns made up $743 billion, or 14.5%, of the $5.13 trillion of retail sales reported last year, compared to 8.8% in 2012.
“For retailers that have seen their margins eroded by the continuing arms race in free shipping, being on the hook to foot the bill for processing the mountain of unwanted, used or damaged goods only compounds their pain,” Yuk wrote. “A returned item may no longer be sellable by the time a customer returns it. This means the item ends up in the discount bin, hurting profits. All this makes returns unpredictable and hard to account for on a company’s balance sheet.”
This is particularly true for apparel, as shoppers tend to order an item in different colors and sizes before returning the ones they don’t like. For some online clothing sellers, returns now average roughly 40% of sales, Yuk wrote.
The report followed news from earlier this week that the NRF expects this year’s holiday season return rate to be 17% higher than usual. January typically sees the most returns — to the point that experts have dubbed the period “Returnuary.”
“Returns are part of any retailer’s relationship with customers — and buyer’s remorse can translate into a sticky customer relationship if returns and refunds are handled adroitly,” PYMNTS wrote earlier this month.
The PYMNTS Intelligence report “2024 Global Digital Shopping Index: SMB Edition,” commissioned by Visa Acceptance Solutions, found that merchants who expect an increase in revenue are 31% likelier to offer online returns than those who anticipate no revenue change.
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