The Growing Problem of Returns for Retailers

Discover the growing problem of returns for retailers in this informative episode of Herb’s Hot Takes. Host Tyler Kern and Herb Billings, VP of Product Strategy at Datascan, delve into the impact of returns in retail. In the digital age, returns are a challenge for retailers, in both quantity and cost. Unlike brick-and-mortar stores, online shoppers cannot physically try on or touch items before purchasing, leading to higher return rates.

Fit, feel, and color are key factors contributing to returns. Assessing these aspects accurately through online descriptions is daunting. Consumers often order multiple sizes and return what doesn’t fit. Moreover, descriptions can be misleading, incomplete, or subjective, making it difficult for consumers. Retailers struggle to strike a balance between accommodating returns and minimizing revenue impact.

According to the National Retail Federation, consumers in the US alone returned $428 billion worth of merchandise in 2020, representing 10% of all retail sales. Apparel and shoe categories have the highest return rates, ranging from 30% to 40%. The cost of returns is a burden for retailers, especially with the shift towards lenient policies, such as free shipping and full refunds. These policies, while benefiting consumers, increase expenses and can lead to as much as a third of revenue loss.