It’s no secret that online shopping has started to become the new normal for many of us, a trend that only accelerated during the pandemic. Just about anything you could think of can be delivered to your door these days. And that privilege of extreme convenience has not only changed our shopping habits and rapidly increased online sales, but it’s also led to an increase in returns.
In recent years, retailers have been losing millions on free returns. According to Insider, about 60% of shoppers really like ordering multiple sizes and colors of a product and then returning the ones that don’t work for them, a practice known as “bracketing.” This has created a significant expense and a “logistical nightmare” for retailers.
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Per the National Retail Federation, shoppers sent back about $100 billion worth of merchandise purchased online in 2020. The following year, that number more than doubled, jumping to about $218 billion. Free returns might be great for the customer, but they create new costs for both shipping and labor—and retailers have to eat them.
Needless to say, this increase in free returns is cutting into already slim profit margins. Paying for ground shipping and the labor that has to process, sort, and prepare those goods for resale is hurting the bottom lines of many businesses. According to one estimate from reverse logistics firm Optoro, it costs a company 66% of a product’s price to process a return.
This past year has been insanely challenging for retailers overall, from supply chain issues to increased labor and transportation costs, and the outlook for next year doesn’t look any better.
Some Retailers Are Starting To Charge Return Fees
While Amazon definitely has had an influence on the online shopping community thanks to its Prime memberships that offer free returns on most items, Zappos was actually the first retailer to offer the service. This changed user expectations, and many retailers felt pressured to follow suit in order to compete. Now some companies have decided that they’ve had enough and are bringing the era of free returns to an end. If you want to send something back that you’ve purchased online, chances are it’s gonna cost you.
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CNN Business reported this September that fashion retailer H&M will be starting to test a return fee to see customer reactions. Zara skipped that testing phase and has already added a $3.95 return fee. Meanwhile, J.Crew, JCPenney, and Abercrombie & Fitch have all begun charging around $7.50 to $8.00 for returns, which has quickly become the average rate.
How To Avoid Return Fees
It makes perfect sense that retailers would want to curb the return rate and recoup some of those increased costs, so this trend of charging fees will likely become more and more common. The good news is, there are still ways to avoid those fees if you don’t want to pay them.
- VIP memberships: Some companies like DSW use a two-pronged approach to deal with the issue of returns. They charge a fee of $8.50 per return unless you’re a loyal customer. Free returns are included with their higher-tier VIP rewards program, which requires you to spend at least $200 annually.
- Visit a brick-and-mortar location: If you order an item from an online retailer but live near one of their physical locations, you can avoid fees if you return the item to the actual store instead of sending it back through the mail. The reason retailers don’t charge for in-store returns is that the process gets you back into their store, and that’s an opportunity that could lead to another sale.
- Take the return to a designated location: Some online retailers who don’t have a brick-and-mortar store near you do have a free return option as long as you drop the item off at a designated location, like Walgreens. Alternatively, they might give you a QR code to scan so you can leave the item at your local post office.
- Happy Returns: E-commerce returns have become such an issue that companies have popped up to accommodate them. Happy Returns by PayPal is a reverse logistics company that’s placed “return bars” in high-traffic areas throughout the country that accept returns from a number of brands. Once dropped off, Happy Returns will consolidate your returned items and send them back to the retailer for you.
If you’re feeling less than enthused about the introduction of return fees, here’s something to consider. As Erin Halka, a senior director at supply chain management firm Blue Yonder, pointed out to Insider the alternative to return fees would be raising prices. So incentivizing customers to do their part in the returns process might just help keep prices down.
