Business
The days of shoppers sending back unwanted or ill-fitting items for free are basically over as the holiday gift-giving season gives way to the gift-returning season.
More than four in five merchants now charge customers a fee to ship back or return an item that they don’t want, according to a report from logistics firm Happy Returns.
Amazon has started charging customers $1 to return items to a UPS store instead of using a Whole Foods, Amazon Fresh grocery store or Kohl’s — since it owns or has partnership deals with those companies.
Zara, Macy’s, Abercrombie & Fitch, J. Crew, H&M and others have also added shipping fees for mail-in returns, according to CNN.
Abercrombie is charging customers a $7 fee to return items while American Eagle Outfitters deducts a $5 fee from mail-in returns that do not qualify for free returns.
Dillard’s is charging $9.95 to return items by mail while H&M is forcing customers to fork over a $5.99 return shipping fee.
J.C. Penney’s fee on mail-in returns is $8 while J.Crew charges $7.50.
The change was motivated primarily by the mounting cost of both the initial sale of the item as well as the expenses incurred through processing the return.
Last year, customers sent back almost 17% of the total merchandise they purchased — totaling some $816 billion, according to the National Retail Federation.
The 17% figure was more than double the 8% in 2019.
The process of handling returns eats into retailers’ bottom lines. According to retail services firm Inmar Intelligence, retailers spend $27 to handle a return for a $100 item that was bought online.
Analysts estimate that companies lose around 50% of their margin on returns when factoring in the cost of selling the item as well as the processing of the return, according to The Wall Street Journal.
In years past, retailers were willing to absorb the cost in the belief that generous return policies would keep customers coming back.
But the scope of the problem has grown to the point where merchants are now being forced to charge a fee.
“We’re heading for a trillion dollar problem here,” Tom Enright, a retail analyst at research firm Gartner, told The Journal.
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Barbara Terrio is a seasoned business journalist, delving into the world of finance, startups, and entrepreneurship. With a knack for demystifying complex economic trends, she helps readers navigate the business landscape. Outside of her reporting, Barbara is an advocate for financial literacy and enjoys mentoring aspiring entrepreneurs.
