The Cost of Free Ecommerce Returns
One of the major headaches for any e-commerce business is dealing with returns.
To entice shoppers to buy, many companies offer a free returns policy, but this has proven to come at significant financial and environmental costs. Are things about to change?
The Cost of Processing Returns
The option of free returns means that many online shoppers order goods in a range of sizes, colours and styles. They always intend to return the majority of their order. In covering the cost of returns, retailers watch a good percentage of their profits slide away.
For many smaller brands this isn’t sustainable. Misguided is the latest fast fashion brand to go into administration and funding returns will have contributed to their financial woes.
Receiving and processing returns is time-consuming for online retailers. They refund the money, but it often isn’t time or cost-effective to sort and prepare the items for resale. Some items are set aside for seasonal sales, but many are wasted. Millions of items of perfectly wearable clothing are being discarded each year because of the cost of processing returns.
This is preventable waste, but it depends on shoppers changing their habits. One step towards this is to start charging customers for returns.
Charging for returns was introduced by Next several years ago. It was a risky strategy in the competitive fashion e-commerce market. It may have lost the brand some business, but it has helped to prevent waste. With sustainability a growing priority, other fashion brands are beginning to following suit. A ParcelHero article* suggests that we could soon see the end of free returns.
How Will Charging for Returns Help?
Being charged for returns will encourage customers to form more considered purchasing habits. The aim is to reduce the volume of goods being ordered, with shoppers being more thoughtful about what they buy. The intended outcome is to reduce waste and increase the sustainability of online retail operations and the environment. That is an aim that we should all favour.
