Online Shopping Returns: Everything Retailers Need to Know Katie Gilsenan Shopping online is now a mainstream activity. Ecommerce offers great choice and convenience – giving consumers the ability to shop from any device, whenever and wherever they want. But alongside the surge in online shopping comes a much less desired activity for retailers: returns. While many retail brands have seen increased sales as a result of online shopping, a significant amount of these sales are being affected by excessive returns. In the U.S. alone, consumers returned $351 billion of all online and offline purchases last year. Online purchase return rates also tend to increase considerably during holiday periods. The impact of this is profound. Excessive shopping returns can affect profit margins drastically, and often requires additional resources, such as staff and space, to manage the high volume of returns. But just how common are online shopping returns? Why are consumers making them? And what can retailers do to reduce the rates of returns? In a bespoke survey, we explored these questions with consumers in the U.S. and UK. Here’s what we found. Online shopping returns are widespread. Years ago, free shipping or returns were more of a nice-to-have. Nowadays, free shipping and easy or free returns are increasingly expected by consumers. Our data shows that almost 3 in 5 people in the U.S. and UK have returned a product they purchased online in the past 12 months. People aged between 25-44 are more likely to have returned a product to the seller in the past year. However, older generations are also returning products at a notable rate, with over 40% of people aged 45-64 doing so in the past year. Information around online shopping returns is something that consumers actively seek. Almost 80% of people in the U.S. and the UK check the returns policy on a retailer’s website before making a purchase. This behavior is quite consistent across generations. This shows that online shopping returns is an issue that consumers carefully consider before they commit to buying a product, across all age brackets. As a result, a well thought-out returns policy is a key part of a brand’s value proposition and essential in remaining competitive. Online shopping returns are more prevalent than in-store returns. Our data shows over half of online consumers are more likely to return a product they bought online than a product they bought in in-store. This behavior is more common among younger audiences, and is likely partly due to online retailers’ generous delivery services and the ease with which consumers can return products online. Returning a product in-store also tends to require more effort from consumers as they need to travel to the store and face the stress of queues. There’s also the potential embarrassment factor of making lots of in-store returns. Generous delivery services play a significant role in the surge of online shopping returns. Our data shows that 70% of people in the U.S. and the UK pay for a free delivery subscription provided by online retailers, like Amazon Prime. More people in the U.S. (74%) have a delivery subscription compared to the UK (51%). This make sense considering how big ecommerce giants like Amazon are in the U.S. Amazon has entirely redefined the retail industry; free and easy returns and one-hour delivery options are part of its core offering to consumers. However, it also increases the expectation on other retailers to keep up. And for smaller brands, maintaining free shipping and returns can be a significant challenge. Online purchases outweigh returns – but men make returns more often. Our data shows almost 60% of people purchase products online every 2 weeks or more. When we asked online consumers how often they return the products they buy online the majority said they rarely do it. While this seems like good news, it’s important to note returning products is relative to how often they’re purchased. And around 1 in 4 say they make online shopping returns “often” or “always”. Notably, men return products more than women. Men and women make purchases online just as often, but 35% of men say they return the product they buy online “often” or “always” compared to 16% of women. This helps break the stereotype that it’s women who are big shoppers, and reveals men as key drivers of online shopping returns. The top three online product categories doomed to be returned are, unsurprisingly, clothing and shoes (56%) followed by electronics (42%) and accessories/watches/jewelry (30%). What drives consumers to return products online? We know the majority of people have returned products they bought online within the past 12 months and around 25% make online shopping returns quite regularly. But what’s causing this behavior? Over half of online consumers returned a product because it was faulty or damaged, or the size/fit wasn’t right. Retailers can help reduce faulty or damaged products reaching consumers by using good-quality packaging and partnering with reputable shipping companies. Incorrect sizing and fit is a big problem for clothing brands in particular. The big drawback is that consumers can’t try on an item before making a purchase, and therefore don’t know if it’s right until they receive it. A serious cost driver for retailers is consumers buying from retailers while knowing in advance they’re likely to return the item. 17% of people buy different colors and sizes of the same item and the same amount of people tend to impulse buy knowing they’ll likely return the product. Online retailers have made it so easy for people to return products that consumers are increasingly taking advantage of it. To top it off, The National Retail Federation reported that fraudulent returns cost retailers as much as $15 billion in the U.S. in 2017. A common example of return fraud is when consumers buy an item, wear it and then return it to the seller. Brands like Amazon are stamping down on consumers who they feel are making excessive online shopping returns and are closing users’ accounts. It’s likely other companies will follow suit. What would make consumers return fewer products online? We’ve found many features that could help consumers reduce the number of online shopping returns they make. The top solutions are: Detailed/accurate description of the sizing (48%) Photos of the product (42%) Detailed/accurate descriptions of the product (42%) These are all features online retailers can easily implement, and integrating them could be a relatively straightforward way of discouraging online shopping returns before the purchase is made. We’ve seen brands like Amazon are not immune to the problem of ceaseless returns. Amazon has tried to anticipate clothing returns with Prime Wardrobe, a “try-before-you-buy” service through which consumers receive a variety of sizes and colors to try. They keep and pay for the items they want and send the rest back. 34% of consumers say trying before buying would help reduce their online shopping returns. Our data also shows 35% of consumers say an app or technology that helps them determine the correct size before they purchase would also help reduce their returns rate. A Japanese firm, Start Today, created a body-measurement suit called the “Zozosuit”. It’s a skin-tight, full-body suit covered in over 300 fiducial markers that’s used to measure people’s bodies. The company creates a 3D scan of consumer’s bodies, which it uses to recommend them the right size. What does this mean for retailers moving forward? Online shopping returns is part and parcel of doing business online, and consumers say free returns (56%) is a key feature that would motivate them to make a repeat purchase online. Clearly, if brands don’t offer free returns, they risk being shunned by consumers. After all, the availability of free returns is a big incentive to buy, and there’s plenty of alternatives out there for consumers to choose from. However, not all brands are willing, or have the financial capacity, to offer free returns. We already know Amazon has had a seismic effect on the retail industry, and the company often faces heavy criticism for its impact on small businesses. Lately, Amazon has paid specific attention to smaller businesses. It recently announced Storefronts, a new section on Amazon’s marketplace where consumers can shop for products exclusively from small and medium-sized businesses. This presents opportunities for small businesses to work with Amazon and make use of its extensive distribution channels and global exposure. Amazon will pick, package and ship the products and will also take care of customer service and returns. The good news for brands is free returns isn’t the only motivator for consumers to make a repeat purchase online. A quick and easy returns policy (46%) and good customer support (50%) are also key repeat purchase drivers. A returns policy that is completely transparent and straightforward and an effective support service are both features retailers can use to make online shopping returns more manageable and less impactful.