Holiday returns are increasingly becoming a significant issue for retailers, especially during the festive season. Nearly half of retailers view returns as a major problem, a sentiment that has risen dramatically from just 2% last year. This surge in returns is linked to record holiday spending, expected to reach up to $966.6 billion this year, with an estimated $173 billion in returns from Thanksgiving to January end. In 2022, 17.9% of holiday sales, amounting to $171 billion in merchandise, were returned.
Retailers are responding in various ways to mitigate the impact. Companies like H&M and Zara are eliminating free returns to discourage consumers from ordering multiple variants for choice. About 40% of retailers now charge return fees, an increase from 31% in 2022. Amazon is warning customers about frequently returned items to encourage more thoughtful purchasing.
This year, around 60% of retailers are adopting policies such as "returnless" or "keep it" for items where the cost of return outweighs its value, according to goTRG. With the average cost of processing online returns at $30, items priced below this threshold are generally considered not economical to return. Such returns significantly affect profit margins, with companies losing about half of their margin on returns. In 2022, returns led to $816 billion in lost sales for U.S. retailers.
