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America has a problem with online shopping.
Retailers have fueled consumer demand by making the online shopping experience very easy. You can buy an item in just two clicks – and by the time you wake up in the morning, a little brown box will be waiting for you at your doorstep.
But convenience comes with a cost – a cost that is now beginning to pass on to consumers.
Why does it cost you money to return your order online now?
At the start of the Covid-19 pandemic, some Americans coped with stay-at-home restrictions by tapping into online shopping. in 2020, E-commerce sales increased 43% compared to 2019.
But many of those purchases didn’t fit well, creating headaches for retail labels bearing the returns process. In 2021, the average online rate of return was 20.8% — up from 18.1% the year before, according to the National Retail Federation.
Supply chain issues have made every step of the return process more expensive than it was in pre-Covid times. Increases in freight, transportation, fuel, and wages costs resulted in revenue taking a larger share of retailers’ profits. According to Optoro, a reverse logistics technology company, a $50 item Retailers cost an average of $33 to return in 2021, representing a seven percentage point increase in the cost of processing the returns process in 2020.
“It’s gotten out of hand with some retailers,” says Thomas Borders, vice president and general manager of product lifestyle clouds at Inmar Intelligence when it comes to revenue. “And these are the retailers you see who have started charging the consumer to return merchandise.”
Popular brands including Zara, JCPenney, and DSW now deduct shipping fees from refunds for most online orders returned by mail. JCPenney, for example, now charges a flat $8 shipping fee for online returns by mail. Others may soon follow.
Adding costs in a labor-intensive revenue process
The return process is long and cumbersome, but consumers are largely unaware of the work that goes into processing returned items.
A recent survey by Inmar Intelligence and submitted to Forbes Advisor found that while more than half of respondents shop online at least once a week, a fifth report that they have no knowledge of what happens to the items they return.
Items are validated and checked for wear or use (Inmar says workers go as far as sniffing clothes to make sure they aren’t worn), replacing or adding a hanger, folding and finally packing. All of these can cost up to $7 per item, according to Inmar Intelligence — and that doesn’t include shipping costs to the return processing location or the cost of fulfilling and shipping an order when an item is resold.
Borders says some items can’t be restocked. Fast brands, for example, usually release fashionable items; By the time the return process is complete, the company may have already started selling the next trend. In these cases, the return is sold at a retailer at a discount — or worse, Ends up in a landfill.
Are free returns a relic of the past?
Retailers are likely to continue implementing strategies that limit online over-purchasing, Borders says, including cutting or limiting free returns.
“[Removing free shipping] It is one of their main attempts to reduce over-purchasing online as people feel there are no consequences because they can eventually return it if they don’t like it,” Borders says. It’s also possible that brands will raise the minimum free shipping threshold when buying orders to prevent over-purchasing, he says. Purchase: Consider free shipping on purchases of $75 or more, replacing a minimum of $50.
Some retailers are even considering letting customers Keep unwanted itemsBecause of the pandemic-related inventory glut, the cost of storing this surplus and the compounding cost of revenue.
While this may seem profitable to both consumers and retailers, Borders says it places an unfair burden on customers to figure out how to get rid of unwanted items.
“People don’t want things for a good reason,” Borders says. “There is also the detrimental effect of that, I don’t think a lot of people think about it. You can’t just throw everything in the trash.”
Limits specifically refer to items such as electronic devices that may contain harmful substances within them. They can be disposed of incorrectly when customers do not want to keep them.
Garment waste is also harmful to the environment. The average American throws away 70 lbs of clothes And other textiles every year—many of them end up in landfills, ever since 60% of textiles are not recyclable.
How to avoid returns costs
The holiday shopping season is approaching. If you want to increase your purchases — and avoid accumulating return fees — consider these tips.
Returning items in the store location
Although shipping returns is usually more convenient, many retailers incentivize customers to do it in-store for free. Check the store’s return policies before checking online to avoid any unpleasant surprises if you need to return.
Avoid gifts from fast fashion sellers
fast fashion Problematic for a variety of reasonsincluding the environmental damage it can cause. Borders says fast fashion retailers are also more likely than higher-priced brands to charge fees for returns online.
Due to “bow” demand, where consumers buy multiple sizes or colors of items to try at home, some consumers buy much more than they intend to keep from these retailers — and returns costs increase. If you plan to purchase multiple sizes for yourself or someone else, what you return in the end may result in a fee being 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 consider: Some stores, like Old Navy, do not accept returns of certain items online at their physical locations. Be sure to read the store’s return policy.
Give gift cards
At one point, giving gift cards as a gift was seen as tacky or thoughtless. In fact, they can help both the giver and the recipient save money. If you want to give an outfit as a holiday gift this year, give a gift card instead of playing a guessing game with sizing.
If you are frequent Rewards or cashback credit card User, you may be able to redeem points or cash for gift cards. Check your rewards portal for more information.