Picture this: You spot a fantastic deal online, make the purchase, and eagerly wait for it to arrive at your doorstep. But, alas, it doesn’t quite live up to your expectations. No worries, you think, I’ll just return it. Simple, right? Not anymore.
Many retailers have introduced new fees for online returns. They hope to reduce the number of items flowing back into their warehouses. But, are they pushing away more customers than they’re saving on returns? Let’s delve into this retail dilemma.
A recent survey by logistics company Happy Returns shows that about one-third of retailers have lost customers since introducing these return fees. It’s like they tried to block the flood, but the dam’s springing leaks. Retailers might be slowing down the return train, but they’re risking losing passengers.
Tom Enright, an analyst at research firm Gartner, puts it clearly: “By bringing in a returns fee, you’re at very best going to lose customers.” Enright emphasizes that making it more expensive for customers to buy from you isn’t the way to win them over. This is especially true during the holiday season, where both sales and returns peak, approaches.
Returns are a part of the retail game, and retailers used to embrace them. They saw it as a way to attract customers and boost sales. But when the pandemic led to a surge in e-commerce sales, retailers felt the strain on their profits. Suddenly, the logistics and costs of processing returns were taking a toll.
During the pandemic, consumers became accustomed to ordering multiple sizes and colors of items to try on at home, returning what didn’t suit them. The result? In 2022, about 16.5% of online purchases were returned, up from 9.6% in 2019.
Returns are more than just a logistical headache. They trigger additional shipping, warehousing, and labor costs. Retailers can lose a hefty 50% of their margin when items come back to them.
Retailers are exploring various strategies to tackle this. They alert shoppers about frequently returned items, use online tools to help consumers visualize how apparel will fit, and offer discounts when customers agree to keep their purchases.
Retail giants like Amazon, H&M, and Zara have joined the return fee trend. Some are encouraging shoppers to return items to physical stores, where they can possibly make another purchase and streamline the returns process.
Happy Returns’ survey reveals that a staggering 81% of retailers implemented some form of return fee within the past year, including fees for mailing items back and for home pickups.
These fees, though present, are often not as daunting as they seem. Amazon, for instance, charges a mere $1 fee for using United Parcel Service to send returns instead of dropping them off at specific stores. H&M charges $5.99 to return items through the U.S. Postal Service but waves the fee for loyalty program members. Zara asks for a $3.95 fee for mailing back returns.
While these fees may not break the bank, they’ve managed to deter a substantial number of shoppers. A survey by supply-chain software provider Blue Yonder found that 59% of consumers feel that return fees and stricter policies have discouraged them from making a purchase.
So, there you have it – the return fees, meant to streamline the process, are causing a bit of a stir. As we approach the festive season, retailers must strike a balance between curbing returns and keeping their customers jolly. It’s a delicate dance that could determine who shines in the holiday retail spotlight.