Consumers are pushing retailers’ online return fees

Aaron Schwartz, President of Loop Returns, said that between 60% and 70% of online shoppers will review a return policy before making their first purchase from the brand. Technology company CleverTap said that 76% of first-time shoppers said they would likely shop from a retailer again if the return experience was “easy” or “very easy.”

The National Retail Federation conducted a survey ahead of the 2021 holiday season. The 2021 Consumer Returns in the Retail Industry survey found that $761 billion worth of merchandise was returned across all retail channels in 2021. For every $1 billion in sales, retailers incur $166 million in returns. Online returns totaled $218 billion in 2021. Returns from online sales rose to 20.8% in 2021.

With Black Friday marking the official start of the holiday shopping season and Cyber ​​Monday just days away, it seems now is the time for retailers to make the returns process as easy as possible. And yet more and more retailers are trying to complicate the process for consumers as they struggle with the cost of returns.

More than two dozen major retailers have announced fees for returning items purchased online. Among them are Abercrombie & Fitch, Dillard’s, Foot Locker, JCPenney Urban Outfitters. Neiman Marcus and Saks Fifth Avenue. In some cases, a return is a flat fee, in others it may be free for a period of time and then fees apply.

FarEye has released a new survey of 1,000 consumers in the US and UK and found that charging retailers for returns could be doing more harm than good to their bottom line.

“Returns are a concern for retailers as they cost an average of 66% of the total purchase price, yet the retailer sees no revenue from the purchase,” said Kushal Nahata, CEO and co-founder of FarEye. “Putting the costs on consumers is not the solution, however. Retailers need to critically review their returns strategy to reduce costs in ways that don’t impact the consumer, such as: For example, offering multiple drop-off locations for returns to reduce shipping costs and increase efficiency. These survey results, while not surprising, show a disconnect between retailer plans and consumer expectations.”

Ninety percent of respondents to the FarEye survey said they would be cautious when shopping from a retailer that charges a return shipping fee. Additionally, 50% of US consumers said they would not pay for a return.

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The survey, conducted earlier this month as the holiday shopping season was in full swing, found that 61% of US consumers and 51% of UK consumers have returned at least once during the 2021 holiday season, 42% and 53% respectively, expect a return this year.

Clothing bought online has traditionally had a higher return rate than many other items, as consumers buy multiple sizes to get the right fit. This contributes to the returns problem, according to FarEye, with 29% of US consumers and 48% of UK consumers admitting they plan to buy multiple items of clothing with the intention of returning some.

Most consumers — 84% in the US and 82% in the UK — said they also care about being able to return items between 30 and 90 days, so retailers have more restrictive policies — like Neiman Marcus, which accepts free returns 15 days before charging $9.95 – could lose customers who turn to competitors with more lax policies.

“Consumer expectations will undoubtedly remain high throughout the holiday shopping season – one of the most profitable and critical revenue periods for retailers,” Nahata said. “As retailers continue to simplify the last mile delivery experience, they must not forget about the returns experience. That too should be just as easy as the delivery experience.”

However, the poll offered some hope. In the US, 37% of consumers said they prefer to return items in-store. In the UK it was 35%. A post office or a drop-off point was preferred by 31% and 44% respectively.

In fact, accepting in-store returns online is the cheapest method for retailers, and a growing option for many, according to research from PayPal’s Happy Returns division.

More than half (54%) of respondents to a recent Happy Returns survey said they prefer in-person, box-free return options, compared to just 26% who prefer home pickup. In fact, 63% of shoppers said they would be much more likely to shop from a retailer that offers free, no-package returns with an immediate refund.

“The growing preference for personal, box-free returns is a huge opportunity to offer customers the seamless returns experience they’re looking for while reducing costs by up to 40%,” said David Sobie, vice president of Happy Returns.

Once in-store, 62% of respondents said they used their refund to shop at that location.

Another option is returnless refunds – where the retailer allows the consumer to keep the item while refunding the purchase price. In a survey published in 2021, Narvar found that 75% of shoppers were offered a refund without having to return the item.

“It’s actually cheaper to provide refunds to buyers than to have to facilitate returns,” the Narvar survey found. “Both the shipping and other operational costs associated with a return are typically more expensive than the actual item purchased, so retailers are willing to simply bear the loss of the item and avoid a greater loss in facilitating the return .”

For the customer, the experience is often positive, with 87% saying they are more likely to shop with that retailer again because of this approach, and 40% saying they would recommend the retailer to others.

What doesn’t make the customer happy? pay for returns.

Click here for more articles by Brian Straight.

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