eCommerce and new return policies with free returns
After years of extremely lenient return policies, eCommerce is undergoing a significant shift. The widespread abuse of free returns has led to a reversal in course as logistical management and associated costs become unsustainable. With up to $27 for every $100 spent to handle excessive returns, retailers are reconsidering their policies.
The generosity of cost-free return policies has encouraged irresponsible consumer behavior. Indiscriminate online shopping, fueled by the belief that "anything can be returned," has resulted in a surge of excessive returns, now dubbed as "crazy." This has prompted retailers to withdraw from services once considered convenient and enticing.
Cost proportion and impact on retailers
Logistical costs for managing returns, estimated at up to $27 for every $100 spent, are putting retailers under considerable strain. This expense includes transportation, storage, checks, laundering, and packaging. The Wall Street Journal suggests that involved companies lose at least 50% of the margin on returns, making the situation unsustainable.
Fashion giants such as Amazon, Zara, H&M, J.Crew, Anthropologie, and Abercrombie & Fitch are now reconsidering their return policies. In the U.S. market, where 17% of online purchases in 2022 were returned to physical stores, amounting to $816 billion, the issue cannot be ignored.
Fraudulent Returns and Environmental Impact
Beyond behavioral abuses, "wild" returns involve fraud. According to NRF and Appriss Retail, 13.7% of retail returns in the U.S. in 2023 constituted a $101 billion scam. Besides economic impacts, there is an immense waste of resources and increased pollution due to transportation, storage, and other stages of return management.
The solution appears to be the return of paid returns. Although currently involving a few euros, the effectiveness of this decision remains to be verified. This reversal represents both an economic and environmental challenge as retailers seek to balance customer satisfaction with sustainable costs.
The Future of eCommerce and New Return Policies
The issue is not limited to the United States; the United Kingdom has already adopted surcharges for returns. In conclusion, eCommerce is facing a crucial challenge, seeking a new balance between return policies and sustainability.
The end of "Free Returns" marks a pivotal shift, demanding deep reflection on responsibly managing the return process in the digital era.