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Surge in online product returns squeezes profit margins

Surge in online product returns squeezes profit margins
Surge in online product returns squeezes profit margins
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The e-commerce industry is facing a sharp rise in product returns, and businesses are battling to keep up financially. Retailers are now in a hurry to review their return policies as consumers demand hassle-free returns. 

Businesses are caught between keeping customers and the balance sheets happy. Customers are demanding free returns, and businesses don’t want to ignore this. However, they also have to juggle the financial costs involved. 

Financial impact of returns on a business

The financial impact of these returns is substantial. Austin Waddecar, chief product officer at Fulfilmentcrowd has told Fashion United, “Retailers are taking a harder stance on mass customer returns due to the operational costs, inventory management challenges, environmental concerns, and fraud prevention.”

Despite these efforts, consumers still overwhelmingly prefer free returns, easy processes, and fast refunds. 

Retailers have to balance these consumer expectations while reducing abuse and managing the environmental toll of reverse logistics.

Chelsea Banister, head of customer operations at Fulfilmentcrowd, told the fashion magazine, there are definitely shifts in return policies. She says this could lead to a reduction in mass purchasing, helping retailers cut down on returns and promote more sustainable shopping behavior.

This evolving e-commerce landscape could significantly affect profitability and sustainability in the retail sector in the coming years.


ALSO READ: The growing importance of reverse logistics


Policy changes to curb frequent returns

Recently, the online fashion retailer ASOS made major changes to its return policy fee in the UK, which affected those who frequently send back items. 

Instead of incentivizing frequent shoppers, ASOS decided to end its frequent returns policy. 

Customers are now charged $5 when they keep less than $52 worth of their order. However, if they keep goods valued over that same price, there is no fee involved.

NOW READ: The Challenges of Reverse Logistics and Steps Not to Neglect Customer Satisfaction

About the author

Mia Lindeque

Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.

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