Nov 5, 2023 - Economy

Free returns disappearing from retailers

Illustration of a return stamp shaped like a pointing finger and another pointed finger stamp that says nope facing each other

Illustration: Natalie Peeples/Axios

The era of free returns — an essential part of the rise of online shopping — is ending.

The big picture: Many retailers are fed up with paying for and processing an endless barrage of return packages, and they're starting to charge for it.

Zoom out: Returns surged during the height of the pandemic, when more people were shopping online.

  • The return rate increased from 10.6% in 2020 to 16.5% in 2022, costing retailers more than $800 billion, according to the National Retail Federation.
  • The packaging, freight and labor costs that go into returns mean processing them costs around a third of the price of the actual items, says Heidi Isern, a VP at Narvar, which makes software for retailers.

63% of consumers said they order multiple sizes or versions of the same item, with the intention of returning what they don’t want, according to Narvar. That’s up from 55% in 2019.

  • “The living room is the new fitting room,” Isern says.

Zoom in: More than 40% of retailers are now charging return fees, per Narvar’s research.

What to watch: Look for tiered returns, Isern says.

  • Retailers might allow free returns in you sign up for a loyalty program, but charge less frequent customers who send items back.
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