Returns Are Getting Harder—and Consumers Are Taking Note
U.S. consumers are catching onto the fact that retailers are tightening up returns.
According to a Harris Poll consumer survey commissioned by e-commerce shipping software provider Shippo, nearly three in four U.S. shppers who have returned online purchase in the past 12 months (72 percent) have noticed retailers making the experience more difficult over that time span.
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More than half (54 percent) have felt blindsided by a retailer changing its online purchase return policy.
Retailers are making concerted efforts to discourage returns, with 35 percent of consumers saying they only allow exchanges or offering store credit, meaning they no longer offer refunds to the original payment method.
This is likely the safest returns policy shift retailers can currently make. The survey revealed 55 percent of U.S. consumers who made online purchase returns in the past 12 months would prefer to shop with a retailer that encourages the donation of unwanted items and offers a store credit rather than one that refunds to the original payment method once they receive the returned item.
Other policy changes include 33 percent of shoppers who say retailers no longer offer free return shipping, while 31 percent observed shorter return windows. Eighteen percent said they noticed more requirements for returns to be made in person.
More than $816 billion worth of retail purchases were returned by shoppers in 2022, with $212 billion bought online, according to the National Retail Federation (NRF). Return rates of online-bought goods dipped from 20.8 percent in 2021 to 16.5 percent of total sales last year, a potential indicator that the stricter rules are working.
For all the effort retailers are putting into stopping returns, most still view them as inevitable. As many as 69 percent of respondents say they treat returns as a “cost of doing business,” according to research from Incisiv and Appriss Retail.
According to data from the Shippo/Harris Poll survey, 80 percent of consumers say if an online retailer they regularly purchase from made their return policy more difficult, they would buy from a different retailer with a more favorable return policy instead. Retailers like Zara and Boohoo drew outrage across social media when they implemented return fees.
Shippo gave two recommendations for retailers to strike a balance between business and customer needs. The first is to include the return label in their initial package. This could be a favorable return strategy for customers as it allows them to stick the label on the parcel and drop it off at the carrier or drop-off location of the retailer’s choosing.
The second suggestion is for retailers to use returns software, and direct customers through an online portal where they can collect data (such as why they’re making the return), promote exchanges and allow customers to either print a label at home or send them a QR code to use at a drop-off location.
When it comes to returns, Shippo says, data is everything.
“You’ll want to look at your previous returns data before choosing your strategy. You’ll also need to monitor return rates and compare them to sales data throughout the year to see if those who made returns ordered again and, if so, at what rate,” the report said. “No matter the strategy you choose, you’ll need to consider the possible effects it will have on your customer as this will inevitably affect your bottom line. Look at your own data and your customers’ behavior to help find a return policy that saves money, retains customers, and builds your shipping operations for success for years to come.”
The returns survey was included in joint shipping and fulfillment benchmarks report from Shippo and ShipHero, which also highlighted the broader impact of shipping costs on a retail business.
Those in fashion have seen prices rising over the past year.
Apparel saw a 14 percent year-over-year increase in average order value (AOV) to $109.57 per cart, up from $96.36 in 2022, according to the report.
This marks the second-highest annual jump in AOV after beauty and skincare products, which increased 28 percent to $94.22.
However, rising shipping costs are a contributor to apparel’s AOV increase. Annual shipping label costs for apparel shot up 12 percent to $9.27 in 2023, once again pitting the category as the second-highest increase in costs, behind the 15 percent jump for shipping label costs at sports and outdoor products.
Th survey suggested that apparel sellers should lower shipping costs by using poly mailers to package their products, while those in the beauty/skincare, jewelry, and health/wellness product categories can use smaller boxes or even free boxes from carriers to lower their shipping costs.
