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America has a problem with online shopping.
Retailers fueled consumer demand by making the online shopping experience a little too easy. You can purchase an item with just two clicks – and the moment you wake up in the morning, a little brown box will be waiting for you at your doorstep.
But convenience comes at a cost, which is now beginning to be passed on to consumers.
Why returning your online order is now costing you money
At the start of the Covid-19 pandemic, some Americans coped with stay-at-home restrictions by being happy with clicks with their online purchases. In 2020, e-commerce sales increased by 43% compared to 2019.
But many of those purchases turned out to be inappropriate, creating headaches for retail brands enduring the returns process. In 2021, the online return rate averaged 20.8%, up from 18.1% the previous year, according to the National Retail Federation.
Supply chain issues have made every step of the returns process more expensive than in pre-Covid times. Rising shipping, transportation, fuel and wage costs caused yields to further weigh on retailers’ profits. According to Optoro, a reverse logistics technology company, a $50 item costs retailers an average of $33 to return in 2021, marking a seven percentage point increase in the cost of processing the returns process in 2020.
When it comes to returns, “it’s gotten out of hand with some retailers,” says Thomas Borders, vice president and general manager of lifestyle product cloud at Inmar Intelligence. “And it’s the retailers that you see that are starting to charge the consumer in order to return the merchandise.”
Popular brands including Zara, JCPenney and DSW now deduct shipping costs from refunds for most online orders returned by mail. JCPenney, for example, now charges a flat $8 shipping fee for online mail-in returns. And others may soon follow.
Costs add up in the labor-intensive return process
The return process is long and tedious, but consumers are largely unaware of the work involved in handling returned items.
A recent survey by Inmar Intelligence and provided to Forbes Advisor found that although more than half of respondents shop online at least once a week, a fifth say they don’t know what happens to items. that they return.
Items are validated, inspected for wear or use (Inmar says workers go so far as to sniff clothes to make sure they haven’t been worn), replace or add a hanger, fold and finally put in bag. All of these actions can cost up to $7 per item, according to Inmar Intelligence, and that doesn’t include shipping to the returns processing location or the cost of fulfilling and shipping the order when an item is resold.
Some items can’t even be restocked, Borders says. Fast-fashion brands, for example, usually offer trendy items; by the time the feedback process is complete, the company may already be selling the next trend. In these cases, the return is then sold to a discount retailer or, worse, ends up in a landfill.
Are free returns a relic of the past?
Retailers will likely continue to implement strategies that limit excessive online shopping, Borders says, including removing or limiting free returns.
“[Removing free shipping] is one of their major attempts to reduce online overbuying where people feel like there are no consequences because they can eventually return it if they don’t like it,” Borders says. He adds that brands will likely also increase their free shipping minimums on order purchases to prevent overbuying. Consider free shipping on purchases of $75 and over, replacing a minimum of $50.
Some retailers are even considering letting customers keep their unwanted items, due to a pandemic-related inventory glut, the cost of storing that excess, and the compounding cost of returns.
While this may seem like a win-win solution for consumers and retailers, Borders says it places an unfair burden on customers to figure out how to dispose of unwanted items.
“People don’t want things for a good reason,” Borders says. “There’s also the detrimental impact of that, which I don’t think a lot of people consider. You can’t throw everything in the trash.”
Borders specifically indicate goods such as electronic devices that may contain harmful materials. These could be improperly disposed of when customers do not want to keep them.
Clothing waste is also harmful to the environment. The average American throws away about 70 pounds of clothing and other textiles each year, many of which end up in landfills, since 60% of textiles are not recyclable.
How to avoid return shipping
The holiday shopping season is fast approaching. If you want to maximize your purchases and avoid racking up return shipping costs, consider these tips.
Returning Items to a Store
Although shipping a return is generally more convenient, many retailers encourage customers to do so for free in-store. Check the store’s return policies before paying online to avoid any unpleasant surprises if you need to make a return.
Avoid giveaways from fast fashion retailers
Fast fashion is problematic for a variety of reasons, including the environmental damage it can cause. But fast-fashion retailers are also the ones more likely than higher-priced brands to charge for online returns, Borders says.
Due to “parenthetical” ordering, where consumers buy multiple sizes or colors of items to try on at home, some consumers buy far more than they intend to keep from these retailers, and the back add up. If you plan to purchase multiple sizes for yourself or someone else, what you return may have a charge deducted from your refund.
If you must order from these retailers, make sure they have a physical store near you so you can return unwanted items for free. Another thing to keep in mind: some stores, such as Old Navy, don’t accept online returns for certain items to their physical locations. Be sure to read the store’s return policy.
Offer gift cards
At one time, giving gift cards as gifts was considered cliché or thoughtless. In fact, they can help both the giver and the recipient save money. If you want to give clothes as a holiday gift this year, give a gift card instead of playing a guessing game with sizing.
If you frequently use rewards or cash back credit cards, you may be able to redeem points or cash for gift cards. Check your rewards portal for more information.