Retailers Experienced $369 Billion in Returns in 2018

Retailers have been allowing customers to return unwanted items for free for quite some time. Yet recently, more than a small percentage of people are taking advantage of this system, and many businesses are returning to models employed in the 1980s and 1990s to deter or ban people from using their service in the future.

One of the biggest steps is eliminating pre-paid labels for returns. If you want to return items in 2020, then you’ll need a receipt and also to pay for your own shipping. Refusing to follow the rules can mean e-commerce platforms may even blacklist customers who have a significantly high rate of returns.

10% of Retail Items Get Returned Each Year

Wellness brands like Garden of Life, Host Defense, or Klaire Labs don’t experience high return rates because the products take time to work. People invest in them as a way to support healthier routines. Even if the outcome occurs because of a placebo effect, there is value experienced in the purchase.

That’s not the same approach customers take when shopping for clothing, shoes, and similar items through online stores. Over $369 billion in merchandise, the equivalent of 10% of the total amount of sales revenues in 2018, was returned in the United States. That’s $100 billion more than 2015.

Returns are problematic because they eat into company profits. The logistics to take an item back from a buyer is costly, and it requires storage. This stock often sits in a pile at a warehouse until someone can organize it. Having the items go to the landfill is more common than most people realize.

How Do We Improve This Situation?

Some stores have no desire to pull away from the no-question returns policies that are in place today. Costco, like other businesses in this space, says that doing so would indicate a lack of trust in the customer.

Retailers like Anthropologie are willing to go in a different direction by charging a small fee for mailed returns. Fashion Nova provides in-store credit instead of offering a refund.

Then there’s Abercrombie, which says in 2020 that no returns will be considered without an order confirmation, invoice, or receipt. 

Amazon handles customers who make consistent returns differently. Some consumers are banned for life from using the platform. Most large retailers and e-commerce platforms report at least some effort to spot repeat offenders who return items all of the time.

Stores will still allow returns moving forward. People change their minds, receive unwanted gifts, and experience product issues, so this customer service requirement will always exist. 

How a business processes that need is what will change the industry.