As much as consumers love shopping online, most hate to shell out for shipping charges. Paying for return shipping is even worse.
These days, 77% of shoppers check the return policy before making a purchase, according to a September survey of 1,500 adults by GoDaddy. Nearly a third, 30%, of consumers said paying for return shipping was more annoying than jury duty and going to the Department of Motor Vehicles.
When it comes to winning over customers, return fees matter, other reports also show.
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Last year, retailers got more aggressive when it came to charging for returns, with an average extra fee just shy of $7, according to returns solution company Optoro.
However, 37% of shoppers said the most frustrating thing about making a return is paying the shipping charge, and 62% of shoppers said they won’t initially shop with a brand if they charge a return fee, Optoro found.
While restocking fees and shipping charges may help curb the amount of inventory that is sent back, “charging for returns will absolutely depress your sales,” said Amena Ali, Optoro’s CEO.
This is especially true as the peak holiday shopping season kicks into high gear.
“Businesses need to take a look at the ways they could be inadvertently turning customers away,” said Amy Jennette, GoDaddy’s trends expert.
Still, companies are doing what they can to keep returns in check.
Last year, 81% of U.S. retailers rolled out stricter return policies, including shortening the return window and charging a return or restocking fee, according to a report from return management company Happy Returns.
Others, including Amazon and Target, have simply told shoppers to “keep it,” offering a refund without a taking the product back.
“Retailers have no choice but to figure out how to manage costs,” Ali said.
Why returns are such a problem
The return rate in 2023 was about 15% of total U.S. retail sales, or $743 billion in returned goods. For online sales, the numbers of returns are even higher, with a return rate closer to 18%, or $247 billion of merchandise purchased online returned, according to the National Retail Federation’s most recent data.
With the explosion of online shopping during and since the pandemic, customers got increasingly comfortable with their buying and returning habits and more shoppers began ordering products they never intended to keep. Nearly two-thirds of consumers now buy multiple sizes or colors, some of which they then send back, a practice known as “bracketing,” according to Happy Returns.
But all of that back and forth comes at a hefty price.
In fact, processing a return costs retailers an average of 30% of an item’s original price, Optoro also found. But returns aren’t just an issue for retailers’ bottom line.
What happens to your returns
“Often returns do not end up back on the shelf,” and that also causes a problem for retailers struggling to enhance sustainability, according to Spencer Kieboom, founder and CEO of Pollen Returns, a return management company.
Also referred to as reverse logistics, a return requires sending products backward through the supply chain to be repackaged, restocked and resold — sometimes overseas.
That reordered process is “like playing a tape in reverse,” said Optoro’s Ali.
It generates even more carbon emissions to get those items back in circulation, if they even make it that far. In some cases, returned goods are sent straight to landfills, while only 54% of all packaging is recycled, according to the U.S. Environmental Protection Agency.
Last year’s returns created 8.4 billion pounds of landfill waste, according to Optoro.