In the retail industry, January and February are sometimes referred to as return season, owing to the flood of post-holiday returns.
Looking to cut costs and waste and improve the bottom line, some merchants, including Amazon, are rolling out return charges and other measures.
Free mail-in returns were a key strategy Amazon that leveraged to get customers accustomed to brick-and-mortar shopping to buy into online shopping. But now, the e-commerce giant is charging customers $1 to make returns at UPS stores if there is a Whole Foods, Amazon Fresh grocery store, or Kohl's nearby. In a further effort to cut down on returns, "frequently returned" items are being identified on Amazon sales pages, which may discourage some customers from making a purchase. This could pressure sellers into upping the quality of their goods or the accuracy of their sales pages.
Clothing retailers, in particular, have been hit hard by excessive returns. Coresight Research has found that the return rate for clothing bought online weighs in at over 24 percent, about 8 percent higher than the overall online return rate. Since people make purchases online without trying the clothing on, poor fit is the biggest driver. Easy and free return policies have encouraged shoppers to risk buying clothing without trying out its fit, knowing that they could return it for free later. Gap and Banana Republic recently shortened their return windows, while Abercrombie and H&M now charge fees for mail-in returns.
The National Retail Federation reports that about 17 percent of purchases were returned in 2022, amounting to over $800 billion in merchandise value. Returned merchandise often goes to landfills or liquidation warehouses, creating a lot of waste and pressure on the bottom line. While the current return restrictions are limited, they might be a sign of more dramatic changes in the future.
