Global supply chain software provider Blue Yonder has shined the spotlight on e-commerce returns in a report. This insight could help ahead of the busiest time when customers return Christmas gifts.
This report provides a detailed look at the challenges of e-commerce returns, how retailers are addressing them, the actions they’ve taken so far, and what they offer to customers. The findings are based on a survey of US online retailers.
Tim Robinson, corporate vice president at Blue Yonder highlights that e-commerce returns continue to be a major challenge for retailers, and current policies alone are not enough to handle the complex issues they create.
Fifty-one percent of respondents say retailers are prioritizing making returns better.
E-commerce returns: A problem at every scale
US online retailers say returns are a “significant” or “very significant” issue for 63% of e-commerce businesses.
The report finds that smaller retailers were hit harder, with 70% of businesses earning under $100 million annually saying returns were a major issue.
What about bigger businesses?
The largest retailers (with over $2 billion in annual revenue) were the least likely to view returns as a major issue in 2023.
- 48% still faced significant challenges
- 22% said returns weren’t a big problem.
Has the rate of returns changed?
The answer by respondents is mostly yes.
Fifty-nine percent say return rates have increased in the past 12 months. While 13% see them decreasing, and 28% find no change.
What are retailers doing about it?
Eighty-nine percent of retailers have taken steps in the past year to shorten return windows, raise fees, or limit return eligibility.
The most common change, made by 42% of retailers in the past year, was shortening the time allowed for returns.
What are the options for customers?
The most common way customers start a return is by contacting customer support, used by 29% of retailers.
Customers have several options to physically return their items. Drop-off points provided by parcel carriers are the most popular option, with 36% of retailers using their own stores and 40% partnering with other businesses for drop-off locations.
Retailers are increasing fees: Key insights
Retailers are increasingly turning to fees as a strategy to manage the growing costs of e-commerce returns.
Overall, fees are common with 79% of retailers reported charging some type of fee.
New fees introduced:
Thirty-two percent of retailers began charging customers for returns in new ways:
- 20% implemented shipping fees.
- 23% introduced restocking fees.
- 10% charged both shipping and restocking fees.
Existing fees raised:
34% of retailers increased their current fees:
- 24% raised shipping fees.
- 17% raised restocking fees.
- 7% raised both types of fees.
Returns need a digital makeover: Here’s why
More than half (53%) of US online retailers still rely on non-digital methods for returns. These include requiring customers to contact support (29%), providing return labels with purchases (18%), or asking customers to handle shipping themselves (6%).
While digital send-back technology offers better visibility and control for retailers and a smoother experience for customers, many businesses haven’t adopted these solutions due to limited technological capabilities.
Even among digital tools, sophistication varies.
For example, advanced systems integrate with order data to show customers only items eligible for send-back, reducing out-of-policy without relying on customer support. This streamlines the process and lowers costs for retailers.
Key insights on retailers’ returns processes
Retailers have room to improve their send-back processes, from collecting insights to offering seamless customer experiences.
Ninety of retailers require customers to provide a reason, while 10% do not ask for any send-back reason, missing valuable insights.
- 87% of retailers always or sometimes offer exchanges as an alternative to refunds.
- Exchanges are often not proactively offered, requiring customers to seek them out.
Tracking updates
- 18% of retailers do not provide tracking updates of items.
- This leads to increased customer support queries and refunds.
Refund automation:
- 58% of retailers always process refunds automatically.
- 19% do so only sometimes, while 23% manually process all refunds.
Promotional Opportunities:
- 44% of retailers consistently send marketing or promotional messages during the send-back process.
- Missing this opportunity means fewer chances to direct customer behavior and drive in-store impulse purchases.
NOW READ: Surge in online product returns squeezes profit margins
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About the author
Sharl is a qualified journalist. He has over 10 years’ experience in the media industry, including positions as an editor of a magazine and Business Editor of a daily newspaper. Sharl also has experience in logistics specifically operations, where he worked with global food aid organisations distributing food into Africa. Sharl enjoys writing business stories and human interest pieces.
