-9.6 C
New York
Monday, December 23, 2024
pCloud Premium

Returns are an $890 billion problem for retailers



241208 retail wm 1127p b77e92

Holiday shopping is expected to reach record levels this year. But a growing share of those purchases will be sent back.

Returns in 2024 are expected to amount to 17% of all merchandise sales, totaling $890 billion in returned goods, according to a new report by the National Retail Federation and return management company Happy Returns. That’s up from a return rate of about 15% of total U.S. retail sales, or $743 billion in returned goods, in 2023.

Even though returns happen throughout the year, they are much more prevalent during the holiday season, the NRF also found. As shopping reaches a peak in the weeks ahead, retailers expect their return rate for the holidays to be 17% higher, on average, than the annual rate.

“Ideally, I hope there is a world in which you can reduce the percent of returns,” said Amena Ali, CEO of returns solution company Optoro, but “the problem is not going to abate any time soon.”

Why returns are a big problem

With the explosion of online shopping during and since the pandemic, customers got increasingly comfortable with their buying and returning habits and more shoppers began ordering products they never intended to keep.

Nearly two-thirds of consumers now buy multiple sizes or colors, some of which they then send back, a practice known as “bracketing,” according to Happy Returns.

Even more — 69% — of shoppers admit to “wardrobing,” or buying an item for a specific event and returning it afterward, a separate report by Optoro found. That’s a 39% increase from 2023.

Largely because of these types of behaviors, 46% of consumers said they are returning goods multiple times a month — a 29% jump from last year, according to Optoro.

All of that back-and-forth comes at a hefty price.

“With behaviors like bracketing and rising return rates putting strain on traditional systems, retailers need to rethink reverse logistics,” David Sobie, Happy Returns’ co-founder and CEO, said in a statement.

What happens to your returns

Processing a return costs retailers an average of 30% of an item’s original price, Optoro found. But returns aren’t just a problem for retailers’ bottom line.

Often returns do not end up back on the shelf, and that also causes issues for retailers struggling to enhance sustainability, according to Spencer Kieboom, founder and CEO of Pollen Returns, a return management company. 

Sending products back to be repackaged, restocked and resold — sometimes overseas — generates even more carbon emissions, assuming they can be put back in circulation.

In some cases, returned goods are sent straight to landfills, and only 54% of all packaging was recycled in 2018, the most recent data available, according to the U.S. Environmental Protection Agency.

Returns in 2023 created 8.4 billion pounds of landfill waste, according to Optoro.

That presents a major challenge for retailers, not only in terms of the lost revenue, but also in terms of the environmental impact of managing those returns, said Rachel Delacour, co-founder and CEO of Sweep, a sustainability data management firm. “At the end of the day, being sustainable is a business strategy.”

To that end, companies are doing what they can to keep returns in check.

In 2023, 81% of U.S. retailers rolled out stricter return policies, including shortening the return window and charging a return or restocking fee, according to another report from Happy Returns.

While restocking fees and shipping charges may help curb the amount of inventory that is sent back, retailers also said that improving the returns experience was a key goal for 2025.

Now 33% of retailers, including Amazon and Target, are allowing their customers to simply “keep it,” offering a refund without taking the product back.

Some are trying buyback programs to keep goods in circulation. In 2017, Patagonia launched its online Worn Wear resale program. Many have since followed that lead, including J.CrewNeiman MarcusCoach and Levi Strauss & Co. 

Some Ikea locations even buy back used Ikea furniture for resale at Ikea stores. There’s also Walmart Restored and Amazon Renewed.

Other retailers sell returns to businesses such as Once Upon a ChildPlato’s Closet and Play It Again Sports, where they are marked down and sold as secondhand. 

“You need an all-of-the-above solution,” said Optoro’s Ali.

How return policies shape shopping habits

Increasingly, return policies and expectations are an important predictor of consumer behavior, according to Happy Returns’ Sobie, particularly for Generation Z and millennials.

“Return policies are no longer just a post-purchase consideration — they’re shaping how younger generations shop from the start,” Sobie said.

Three-quarters, or 76%, of shoppers consider free returns a key factor in deciding where to spend their money, and 67% say a negative return experience would discourage them from shopping with a retailer again, the NRF found.

A survey of 1,500 adults by GoDaddy found that 77% of shoppers check the return policy before making a purchase.



Source link

Odisha Expo
Odisha Expohttps://www.odishaexpo.com
Odisha Expo is one of the Largest News Aggregator of Odisha, Stay Updated about the latest news with Odisha Expo from around the world. Stay hooked for more updates.

Related Articles

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe
Best Lifetime Deals on SaaSspot_img

Latest Articles

PCB picks UAE as neutral venue for Champions Trophy – Sport

0
LAHORE: The Pakistan Cricket Board (PCB) on Sunday announced the UAE as the neutral venue for India’s matches of the forthcoming ICC Champions...

TikTok creators share how to keep the holidays affordable in 2024

0
There was once a time that Amanda Maze, a home health nurse and mother from Kentucky, took out loans to pay for her...

Lance Bradley: Ospreys confident of new St Helen’s timetable

0
The move will require significant redevelopment of the famous old ground, which is still the home of Swansea RFC, to initially increase the...

The Cowboys derailed the Bucs’ postseason hopes, plus huge games from Jayden Daniels and...

0
Hours after Dallas was eliminated from making the NFL’s postseason Sunday, it still affected the playoff race across the NFC.The Cowboys beat Tampa...

Pakistan whitewash South Africa, wins ODI series 3-0 – Sport

0
JOHANNESBURG: Pakistan have completed an unprecedented clean sweep of their One-Day International series in South Africa with victory by 36 runs in the...