As the volume and processing cost of online purchase returns have increased dramatically in the past 12 months, merchants large and small have been forced to overhaul their policies. This is due to the costly practice of returnless refunds, which many large companies have implemented. This allows customers to keep the items they wish to return while also refunding their money, but it is not a viable option for smaller businesses.

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In response to this issue, Amazon has implemented a number of measures to discourage returns. They now warn customers about buying certain items it deems “frequently returned” and suggest shoppers check “the product details and customer reviews” before they purchase. Amazon has also launched a pilot project with Staples to allow in-person returns at limited locations, and in 2021, they made free returns mandatory for merchants selling apparel on its marketplace.

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A survey from returns specialist goTRG found that 60% of merchants are changing their returns policies, with many eliminating free returns and charging additional shipping or restocking fees. Examples of new shipped return policies include Abercrombie & Fitch charging a $7 fee, American Eagle Outfitters deducting $5 from the refund, Foot Locker deducting $6.99 from refunds on all returns made by mail, and J.C. Penney deducting $8 from all refunds on returned online purchases made by mail.

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Omnichannel retailers accept in-store returns at no cost, and many ecommerce firms will likely follow the Amazon example and partner with brick-and-mortar chains or other third parties so customers can return items for free.

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According to a survey from the National Retail Federations, 73% of retailer survey respondents ranked returns as a “moderate-to-severe issue for their business.” This is a clear indication that merchants are struggling to find a balance between customer satisfaction and cost-effectiveness.

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Sources:

Practical Ecommerce. “Rising Costs Prompt New Return Policies.” Practical Ecommerce, 22 Mar. 2021, https://www.practicalecommerce.com/rising-costs-prompt-new-return-policies
Sources: https://www.practicalecommerce.com/rising-costs-prompt-new-return-policies