Rising Costs Prompt New Return Policies

Merchants have struggled with online purchase returns for years. But the issue has escalated in the past 12 months as the volume and processing cost of returns increased dramatically, resulting in many merchants large and small overhauling their policies.

Returnless Refunds

The problem is magnified by returnless refunds, which many large companies have implemented. Letting customers keep the items they wish to return while also refunding their money is enormously expensive. It might work for Amazon, Target, and Walmart, but most smaller businesses cannot afford it.

Moreover, dishonest customers take advantage of the policy and get the products for free. Larger companies track “serial returners” and ban returns from them, but smaller merchants do not typically have the software or personnel.

Some online companies have encouraged returns by shipping multiple items based on a customer profile with the expectation of some returned items. This practice has fallen out of favor with merchants but not necessarily with consumers.

Habits such as “bracketing” — where shoppers buy multiple sizes or colors expecting to return what they don’t like — are costly, prompting major retailers to clamp down.

Amazon

Amazon now warns customers about buying certain items it deems “frequently returned.” The notification suggests shoppers check “the product details and customer reviews” before they purchase. Amazon has also launched a pilot project with Staples to allow in-person returns at limited locations. This follows Amazon’s similar six-year partnership with Kohl’s.

In 2021, Amazon made free returns mandatory for merchants selling apparel on its marketplace.

Research sponsored by National Retail Federations shows that 73% of retailer survey respondents ranked returns as a “moderate-to-severe issue for their business.”

According to a recent survey from returns specialist goTRG, 60% of merchants are changing their returns policies, with many eliminating free returns. Sixty-seven percent are charging additional shipping or restocking fees.

Return-policy Examples

Following are examples of new shipped return policies as reported by various media sources.

• Abercrombie & Fitch charges a $7 fee.
• American Eagle Outfitters deducts $5 from the refund.
• Foot Locker deducts $6.99 from refunds on all returns made by mail.
• J.C. Penney deducts $8 from all refunds on returned online purchases made by mail.
• J.Crew deducts $7.50 from the refund for shipped returns.
• Kohl’s requires customers to pay for all shipping for returns.
• Lands’ End deducts $6.95 from the refund credit.
• L.L.Bean charges $6.50 for returns and exchanges through U.S. mail unless the customer used an L.L.Bean Mastercard for the purchase.
• Pacsun deducts $7 from the refund.
• REI deducts $5.99 from refunds for packages of standard size and weight.
• Shoe Carnival deducts $6 from all refunds on online returns sent by mail.
• Urban Outfitters deducts $5 from all online orders returned by mail.
• Zara charges for returns at a drop-off point — $3.95 in the U.S.

Brick-and-mortar Partners

Omnichannel retailers accept in-store returns at no cost. Many ecommerce firms will likely follow the Amazon example and partner with brick-and-mortar chains or other third parties so customers can return items for free.