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More and more retailers charging for mail-in returns
About 40% of retailers are charging return fees on online orders that need to be mailed back, according to the company Narvar.
MINNEAPOLIS, Minnesota — Cyber Monday is expected to break records with shoppers projected to spend more than $12 billion dollars, according to Adobe Analytics.
But that number does not take into account returns. According to a National Retail Federation (NRF) report in 2022, total returns account for $816 billion in lost sales for U.S. retailers. The NRF said, on average, about 18% of holiday sales end in returns.
More retailers are now charging fees on online returns done through the mail.
The company Narvar said this year about 40% of retailers are charging return fees on online orders that need to be mailed back. In 2022, the average was 31%.
“I was surprised it didn’t happen much earlier. There’s huge restocking costs, as well as transportation costs, and quite a few customers were quite honestly taking advantage of these companies. For instance, some individuals would be buying like five different dresses, trying them all on, and then sending the four back that don’t fit. That would pretty much wipe out the entire profit margin of the firm when they do that,” said Dave Vang, a finance professor at the University of St. Thomas.
Retailers including J. Crew, Kohl’s, H&M, Zara and T.J. Maxx all have mail-in fees for online purchases that need to be returned. More retailers with fees can be found in this USA Today article.
Earlier this year, H&M expanded its program to the UK. Meanwhile, this summer Amazon started charging a $1 fee for returns made through UPS when there’s a free option closer.
“I’m starting to see free shipping kind of decline, as well. Right now we’re enjoying some relatively low gas prices compared to the past year or so. But historically, our fuel prices and transportation costs have gone up, various supply chain issues and things like this, so I’m seeing a trend a little bit away from free shipping unless the order is really, really large,” Vang said.
Vang said we may also see big box stores benefiting from the shift. He gave an example of people visiting a store like Best Buy to learn more about a product before purchasing it through another online retailer.
“If some of these online retailers are putting these additional fees in, then it might make sense for more people to actually go into the store and actually buy from a local vendor who is actually paying property taxes,” Vang said.
It’s unclear if this shift will change shopping habits. According to Narvar, 68% of consumers say a general $3 return or restocking fee will not deter them from buying again from their favorite retailers or brands.
Some retailers charging for mail-in-returns will waive the fee if they’re a loyalty member.
There’s also the environmental impact from returns. Optoro estimates that last year returns resulted in 9.5 billion pounds of waste.
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