Returns cost retailers $816 billion and shoppers bear the burden

In the world of retail, returns are a common occurrence, and they come at a cost for retailers. According to the National Retail Federation, in 2022, approximately 16.5% of merchandise purchased at retailers was returned, amounting to a staggering $816 billion in sales.

Returns can be expensive for retailers, as they often cover the cost of return shipping and are unable to resell returned items at full price. Instead, they typically sell them at a discounted rate or write them off completely. In an effort to offset these costs, some retailers have started implementing fees for returns made through the mail. For example, Amazon began charging customers $1 if they returned an order at a UPS store. However, Amazon still offers free returns at other locations such as Kohl's or its own Whole Foods stores.

Other retailers, including H&M, JCPenney, and J.Crew, have also introduced fees for mailed returns. These fees, which can range from a few dollars to a percentage of the order's value, are often justified to customers as shipping costs or "restocking fees." USA Today reported in November that at least a dozen major brands have incorporated these fees into their return policies.

While these fees may help retailers recoup some of the costs associated with returns, they can also have negative consequences. A survey conducted by supply chain software provider BlueYonder found that 59% of consumers have been deterred from making a purchase due to strict return policies. If retailers make returns too costly or difficult for customers, it could ultimately impact their bottom line.

As a result, many retailers still offer free in-store returns, recognizing that making returns more convenient for customers can be beneficial. H&M, JCPenney, and J.Crew, for example, do not charge fees on returns made at their physical stores. Additionally, some retailers are offering extended return windows for holiday-season purchases. Amazon, for instance, has extended its return period for most purchases made between November 1 and December 31 until January 31, 2024.

It's worth noting that not all retailers are tightening their return policies. Some, like Costco, accept returns on most items indefinitely, while Target allows returns of its own-branded products for up to one year after the date of purchase. These retailers understand the importance of customer satisfaction and the potential impact of lenient return policies on their reputation and customer loyalty.

In conclusion, the issue of returns and associated fees is a complex one for retailers. While they seek to minimize their financial losses, they must also consider the potential consequences of deterring customers with strict return policies. Striking the right balance is crucial for retailers as they navigate the world of returns in an ever-changing retail landscape.


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