Time for a free online refund?
Think twice before ordering those pieces in two sizes – sending one pair back can cost you.
According to a report released on Oct. 15 by the National Retail Federation and Happy Returns, a logistics company owned by UPS, 72% of American retailers now charge customers a return fee, up from 66% a year ago.
Over the past few years, retailers have gradually scaled back one of the biggest attractions of online shopping: free returns. The reason? Rising shipping costs, economic uncertainty and economic uncertainty to handle billions of dollars worth of goods are expected to be sent back this year.
Sellers from Zara and H & M on Amazon have introduced a small amount of certain returns, signaling a wide-ranging return on all merchandise as the companies reconsider the economics of online shopping. For example, we started adding a $1 fee in 2023 for grocery returns at UPS stores where a free option — like Amazon’s Whole Foods — is nearby.
“It’s a challenging way for the e-commerce world,” Tim Fehr, chief operating officer at Happy Returns, told Finance. “PrePandemic, the focus was on growing as quickly as possible and satisfying customers, regardless of the cost.”
Postpandemic, as growth slows and costs rise, retailers begin to focus more on cleaning and growing the bottom line.
“Those trends are continuing, and companies are facing additional headwinds with some of these regulatory and tax changes,” Fehr said. “Many marketers are trying to find ways to be successful.”
This measurement is not only a good choice; It is a financial need. According to the NRF report, retailers estimate that 15.8% of their annual sales – both online and in stores – will be returned this year (that’s equivalent to $849.9 billion).
Internet returns alone are considered to account for 19.3% of sales, with Gen Z consumers leading the way. Consumers born between 1997 and 2012 peaked at about eight this past year. Baby boomers, on the other hand, are as young as five.
The pressures driving these changes go beyond shipping costs. Brandon Yoshimura, director of consumer sales at Solomon Partner, said the environment is forcing companies to rethink whether they can pull financially.
“Coving began to move back away from the ‘undeniable commercial’ of free shipping and returns,” he commented in an email to the money, “noting the email to the money, revealing the disruptions available, prices rising in returns. “The pressure from tax rates, inflation and other costs are forcing companies to look at all parts of their operations in order to optimize profit and Unit Economics.”
For many retailers, covering these costs is simply too much to bear – especially for companies that already operate on thin margins.
Joshimura points to examples like Warby Parker, which recently announced it will start rolling out its try-at-home program after 15 years, as evidence that retailers are rethinking customer convenience. The Eyewear Company Signature program allows consumers to order up to five frames to try on at home, with shipping and returns completely free.
“In the long run, I think this will discourage expensive consumer trends [like] But buying multiple sizes also emphasizes the importance of physical sales as a complement to online sales,” he said.
How returns are changing the way we shop online
For years, consumers have been accustomed to over-ordering, enabled by the convenience of free and fast shipping – buying multiple sizes, colors or options knowing they can ship most of them for free. But now, those habits can come at a cost. As retailers rush to capture cash, returns are becoming a major consideration in how people shop online.
Free returns, fast refunds and easy withdrawal options remain the most important to consumers – and consumers are willing to adjust their habits based on the seller’s policy, according to the NRF report. Many people are now checking return policies before purchasing, and a bad experience can make or break a brand’s credibility.
In fact, nearly 82% of consumers say free returns are important when shopping online, up from 76% last year. And 71% say a returned experience makes them less likely to shop with that retailer again.
At the same time, consumers are finding ways to withdraw money. Some prefer Drop-off Offs or Package Returns, while others pay more attention to return windows (as some sellers make those shorter, too).
Even though consumers continue to spend – Retail spending reached $732 billion in August, up 5% from a year earlier, according to the Census Bureau – they turned around.
The rising cost of returns may be discouraging purchases and switching habits, but experts say it doesn’t signal the end of free returns entirely.
“I don’t think there’s really been as much of a paradigm shift as there has been more scrutiny and analysis,” Fehr said. “Many leading sellers continue to offer freebies – and I think many still like it.”
More from money:
How small businesses can beat the holiday rush without breaking the bank
Gasoline prices just dipped below $3 for the first time this year. Will it last?
How life-changing ‘money’ is for 10 people – and how they used it
