Shipping - Infographic | 8-min. read
Analyzing the Returns Landscape
Returns play an all-important role in retail and e-commerce. They affect profits, stock counts, customer loyalty and much more. Companies intent on managing and growing their business must understand the returns landscape to ultimately lower their return rates and improve operations. Read on for the most pressing statistics, plus practical tips to help get your rates low and your sales high.
Returns Volume in the U.S.
Americans returned billions of dollars in merchandise.
8% of all merchandise purchased in 2015 was returned.1
Shoppers in the U.S. returned $260.5 billion in merchandise in 2015. If merchandise returns were a corporation it would rank #3 on the Fortune 500 list.2
Annual U.S. Return Rates by Retail Category
Department stores, hard goods like appliances and electronics, housewares and women’s apparel saw the most returns.3
Here are the blended return rates4 by category:
Apparel
Home Improvement
Auto Parts
Footwear
Housewares
Beauty Products
Children’s Apparel
Department Store
Sporting Goods
Women’s Apparel
Hard Goods
Online vs. In-Store Return Rates
Shoppers returned online purchases 8X more frequently than those they bought in-store.
For fashion apparel, physical stores experienced a return rate of about 3%, compared with about 25% for online sales. Highly fashionable items, for which the fit was highly important, saw an even higher return rate.5
How Returns Influence Purchasing Behavior
Shoppers preferred hassle-free returns
35% of survey respondents said a hassle-free return policy helps determine which retailers they choose for holiday gift purchases.6
Baby boomers preferred easy returns.
62% of women and men 65 and older said offering an easy return process would improve the shopping experience for Internet users.7
Millennial women preferred easy returns more so than millennial men.
55% of women 18–34 vs. 40% of men 18–34 said offering an easy return process would improve the shopping experience for Internet users.8
Shopper-Preferred Return Policies
In-store shoppers preferred a longer return window and refund options other than store credit.9
- Has refund options other than store credit: 67%
- Allows longer return window: 55%
- No receipt required: 43%
- Allows returns with scan of identification: 28%
- Return policy is not important: 9%
Online shoppers preferred free online returns above all other return policies.10
- Free online returns: 82%
- Can return products bought online at a physical store: 69%
- Has refund options other than store/site credit: 61%
- Allows longer return window: 54%
- Return policy is not important: 10%
Why Shoppers Make Returns
Most common reasons people make returns around the world:11
Return Reason | Amount of Merchandise Returned (US Dollars) |
---|---|
Defective/poor quality | $162 Billion |
Bought wrong item | $99.3 Billion |
Buyer’s remorse | $88.7 Billion |
Found better price elsewhere | $83.4 Billion |
Gift returns | $64.1 Billion |
Wrong size | $62.4 Billion |
Return fraud | $28.2 Billion |
Item didn’t match description | $6.1 Billion |
Item delivered late | $4.6 Billion |
8 Ways to Lower Return Rates
- 1
To prevent returns because of poor quality, routinely check the quality of products and discontinue selling poorly made/poorly reviewed products.
- 2
To prevent shoppers from buying the wrong item, images and product descriptions online should be detailed and accurate. Implement clear marketing and signage to prevent this issue in stores.
- 3
To prevent customers from finding better prices elsewhere, consider price-matching offers and periodic sales to drive customers to purchase.
- 4
In the case of gift returns, in-store or online, create a process and utilize a salesperson or a digital experience to suggest other products or offer store credit when a purchase is returned. That way, the dollars stay in-store.
- 5
To avoid products being returned because of the wrong size, precision is key. Be sure your size charts online are accurate and consider including models’ measurements and sizing to show online shoppers for reference. Train in-store employees to help with sizing, as well.
- 6
To stave off return fraud, be sure your policy is crystal clear on which items can and cannot be returned. Also, push customers to make returns in-store if possible, where an employee can catch return fraud. If you’re exclusively an online retailer, consider implementing a return merchandise authorization (RMA). This adds a human element to the online return process – making it necessary for someone to approve the return before it’s sent back.
- 7
To avoid returns because products didn't match their descriptions, provide your e-commerce team with photos of merchandise for reference, or let them take their own photos, when writing descriptions for the product pages.
- 8
In the case of products returned because of late delivery, consider doing a routine assessment of shipping operations to be sure they are working effectively.
In Conclusion
The first step to improving your return process and your return rates is knowing the facts; the next is leveraging them. Look at any returns data you’ve collected in the past to find your company’s biggest weak points, then combine it with the knowledge above to sharpen your return process and improve customer satisfaction. A few smart changes can make a lasting difference to your bottom line.
1“2015 Consumer Returns in the Retail Industry,” The Retail Equation, https://nrf.com/sites/default/files/Images/Media%20Center/NRF%20Retail%20Return%20Fraud%20Final_0.pdf, 2015.
2Ibid.
3Ibid.
4Retail category rates derived from The Retail Equation (TRE) analysis of 34,000 stores in the specialty and general-merchandise retail segments. TRE reviews returns data direct from POS T-Logs—so all returns, exchanges, online returns, employee-sale returns, and every other refund scenario is considered to build an actual return rate.
5“2017 Retail Trends”, Strategy& PwC, https://www.strategyand.pwc.com/media/file/2017-Retail-Industry-Trends.pdf, 2017.
6National Retail Federation, “2016 Holiday Consumer Spending Survey,” conducted by Prosper Insights & Analytics, Oct 27, 2016.
7“How Millennials and Baby Boomers want you to improve the shopping experience,”Marketing Sherpa, https://www.marketingsherpa.com/article/chart/millennials-baby-boomers-want-improved-experience, January 2016.
8Ibid.
92016 Holiday Survey: Ringing in the Retail, Deloitte LLP, https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumer-business/us-consumer-business-2016-holiday-survey-results.pdf.
10Ibid.
11“2015 Consumer Returns in the Retail Industry,” The Retail Equation, https://nrf.com/sites/default/files/Images/Media%20Center/NRF%20Retail%20Return%20Fraud%20Final_0.pdf, 2015.
Lower Return Rates with a Data-Driven Approach
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Shipping - Article | 2-min. read
3 Steps to Turning a Return into a Sale
Retailers of every size know the pleasure of making a sale, and the letdown that inevitably comes when a product is returned. Rather than lamenting the loss, companies should dig deep and implement tactics to help them understand the reason for the return. With that knowledge, they can learn how to turn a return into a sale. Read on for a three-step process to do just that.
-
1 Ask why the item is being returned.
Before you can offer a solution, it’s important to understand the root cause of the return. Empathize with the customer and actively listen to their needs. Implement a protocol, in-store, online and at home. If a customer returns a product in-store, have your employees ask questions about why the product is being returned. If a customer is returning an item through the mail, include a survey in the packaging that asks the same questions, or create a microsite online as part of the returns process, where customers can answer questions as well.
Tip: Set up a Return Merchandise Authorization
Return Merchandise Authorization is a reverse logistics process that requires a customer to contact you before making a return, whether on your website, through email or by phone. This communication allows you to catch the customer in the midst of a return and propose another solution, preventing you from losing a sale.
-
2 Suggest an alternative.
Once you know the reason for your customer’s return, offer them another, more appropriate product for purchase. Base your recommendation on their answers. If a color or fit was off, show them products better suited to their specific needs in-store and across multiple channels. If you can’t find a replacement product, be sure to let them know of any special promotions going on or try to cross-sell them products from other departments.
Tip: Monitor the products your customers are returning. That way, if you find an item consistently being sent back, you can use return data to understand why it’s defective, if it’s overpriced or just not matching up to its advertising. This will allow you to address the issue and prevent returns in the future.
-
3 Suggest a gift card or store credit.
If the customer is intent on returning their merchandise without making a purchase, propose in-store credit or a gift card instead of a full refund in cash or on their credit cards. You could also enforce a policy that requires returns to be redeemed as store credit only. That way, the value of the sale can still be used exclusively in store or online.
In Conclusion
A healthy returns process is the cornerstone of a successful retail and e-tail business. By studying your customers’ return habits and implementing a system to track the reasons for their returns, you can find multiple avenues to convert their dissatisfaction into another purchase.
Lower Return Rates with a Data-Driven Approach
Learn moreShipping - Article | 3-min. read
Should Your Business Offer Free Return Shipping?
With the increasing competition in ecommerce, retailers that offer free shipping, dependable deliveries, accuracy, and free return shipping are potentially more likely to attract customers than those that don’t. While free shipping is an obvious perk, a recent survey discovered that the majority of respondents also consider free returns an important factor in their ecommerce purchase decision.1
53 percent of respondents said they would pick one store over another if the store offer free returns.2
34 percent of respondents revealed they would only purchase from a store if they knew they could return or exchange for free.3

Why Do Customers Love Free Return Shipping?
Aside from the obvious cost-savings, free returns can provide customers with a sense of security. A study found that in 2015 Americans returned more than $260 billion in goods.4 When customers know they don’t have to pay for return shipping, it allows them to be more indecisive, which is particularly useful when shopping online for clothes, shoes and accessories where there are multiple options, sizes, etc.

Companies That Offer Free Returns Boost Customer Satisfaction
By offering free returns, brands convey that their customers’ interests are top of mind, which can help brand loyalty and lead to repeat business. Given the potentially high costs associated with acquiring new customers versus keeping existing customers, companies are smart to consider free return shipping as one way help to increase sales.

Shipping and Returns Can Be Costly for Retailers
However, offering free shipping and returns can be a significant financial undertaking for businesses. Retailers not only have to cover shipping costs, they also need to staff people to inspect returned packages, and if items are damaged, the company will need to pay money to repair or write them off. Additionally, return delays could affect inventory.5 All of these costs add up, which is perhaps why among the Internet Retailer 2017 Top 500, only 13.2 percent of companies offer free returns.6
How to Incorporate Free Return Shipping on a Budget
Free return shipping isn’t a deal breaker. Here are a few strategies that companies can employ to meet their customers’ needs while being mindful of costs:

Be strategic on when you offer free return shipping. Since nearly a quarter of returns occur over the holidays, consider offering free return shipping during windows with lower return volumes.7

If you choose to offer free return shipping, be economical by selecting the most cost effective return option. Of note, it’s unlikely that customers will be concerned about speedy shipping when returning an item unlike when they are receiving an item.8

Use free return shipping as a marketing tool to gain repeat customers.9 This especially works well with retailers selling clothing, shoes and accessories. When customers know they don’t have to pay for returns, they might order multiple items as options and end up keeping more than one.

Remember that free return shipping isn’t the only way to keep customers happy. If your business builds a trustworthy reputation through reliable delivery, your business can still be competitive without undertaking the costs associated with free return shipping.
In Conclusion
While offering free return shipping may contribute to building brand loyalty and a competitive advantage, it’s important to evaluate if it makes sense for your business. There are multiple routes to achieving customer satisfaction without breaking the bank. To ensure long-standing success, always think strategically and economically, while keeping customer needs top of mind.
1“State of Shipping Survey Results,” Shippo. December 2016.
2“State of Shipping Survey Results,” Shippo. December 2016.
3“State of Shipping Survey Results,” Shippo. December 2016.
4“2015 Consumers Returns in the Retail Industry,” National Retail Federation. December 2015.
5Tonya Garcia, “How free returns on online purchases are crippling retailers,” MarketWatch. December 21, 2016.
6“2017 Top 500 Analysis Report,” Digital Commerce 360. 2017.
7“2015 Consumers Returns in the Retail Industry,” National Retail Federation. December 2015.
8Samantha Drake, “Should You Offer Free Return Shipping? What to Consider,” Entrepreneur. October 21, 2014.
9Samantha Drake, “Should You Offer Free Return Shipping? What to Consider,” Entrepreneur. October 21, 2014.
Lower Return Rates with a Data-Driven Approach
Learn moreShipping - Infographic | 7-min. read
Building a Winning Returns Strategy
Returns can be a complex challenge for many e-commerce businesses—they’re also an opportunity for growth. With a clear, efficient return policy and process, companies can meet consumer needs, prevent abandoned shopping carts, and ultimately help their bottom line.
Understanding and answering consumer expectations is instrumental to building a successful return process. Read on to learn what consumers want from returns, the best practices an e-commerce retailer can implement, and how leveraging data can optimize the process as a whole.
Inside the Mind of the Consumer
Simply put: customers want easy returns. Answering their return needs is a critical aspect of a brand’s customer experience. And they know it.
92%
92% of consumers will make a purchase if the return process is easy.1,2
10%
Only 10% say a return policy isn’t important to them.3
Online shoppers preferred
Free online returns: | 82% | |
Ability to return products bought online at a physical store: | 69% | |
Refund options other than store/site credit: | 61% | |
Longer return window: | 54% | |
Return policy is not important: | 10%4 |
Online shoppers were also apt to note that an effective, easy return process improved their experience with the brand.
62%
62% of women and men 65 and older said offering an easy return process would improve the shopping experience for Internet users.5
55%
55% of women 18–34 vs. 40% of men 18–34 said offering an easy return process would improve the shopping experience for Internet users.6
Best Practices for Returns
Instituting an effective return policy is, of course, a balancing act. Make a policy too easy, and you risk increasing return rates. Make it too strict, and you risk losing customers. This is especially important for online retailers who typically deal with high return rates.
The return rate for apparel purchased online is 20%, for more expensive items it jumps up to 50%.7
To establish a balance, it’s important to know what aspects of a return policy can be made more or less strict. Consider the following:
- How much time you’ll give customers to make returns, whether 30 days, 60 days, etc.
- What guidelines you’ll enforce to accept a return, whether opened packaging is okay, light wear, etc. Note: these may be different by product category.
- How you’ll accept the returns, whether in-store, online, etc.
- How much of their return you’ll refund back, whether 100%, 75%, etc. Note: some retailers choose different refund levels depending on the length of the return window.
- How you’ll refund the dollar value of the return, whether store credit, credit card or cash.
According to Harvard Business Review, 20% return rates can be enough to wipe out a retailer’s operating profit.8 As a result, companies should be wary about creating too lenient a policy. Here are a few things to consider when updating your process and policy:
- 1
Give customers more time to return products.
The more time they have with the product, the greater chance they will keep it. - 2
Limit how much money customers could get back as a refund.
Give customers 100% of their money back for products returned in a short time period—30 days for example—and less money back, say 75% for products returned in 120 days. - 3
Include a return label in shipments.
This makes a customer’s shopping experience more convenient and will be interpreted as such. - 4
Communicate the return policy clearly.
Be transparent about your policies across all channels. A well-defined, easy-to-access policy helps customer’s decision-making process and their overall experience.
Making the Most of Return Data
Once your return policy is updated and in place, data and analytics can offer great value to a growing business. Collecting valuable information provides insights on a product and process level. Here’s why a return data collection process can help your business grow:
Short-Term Benefits
Solve customer satisfaction issues.
For example, if a product is grossly different from its description. Having that information can help you update the description to prevent future issues.
Address warehouse malfunctions.
If you’re finding products are being incorrectly picked, packed and shipped, having this information can help you reorganize your warehouse properly.
Long-Term Benefits
Inform future orders.
Knowing what products are returned most frequently and why will help you make better stocking decision, giving you information about what fabrics, styles to order and more.
Improve manufacturer and vendor quality control (QC).
If products are being sent back because of poor quality or imperfections, this can help you work with your vendors
to improve their QC processes or find better vendors for your business.
Creating a Return Data Process
Gathering gigabytes of data isn’t enough to ensure valuable insights. It’s also important to manage your process well. Here are a few points to keep in mind:
- 1
Create a return survey to capture customer’s reasoning.
Give customers a rubric for return reasoning and leave a space for comments. The more information they can give, the more you can leverage. - 2
Consider creating a Return Merchandise Authorization (RMA) to add a human element to the return process.
An RMA allows customers to request approval for returns—online or over the phone, and is another opportunity to collect return information. - 3
Clearly define the data you want to be gathering.
Whether you’re looking at return surveys or in-depth return analytics reports, it’s important to establish exactly what data you want to gather. - 4
Do routine quality checks of the data you collect to ensure it’s complete and accurate.
You don’t want to make business decisions off the wrong information.
In Conclusion
With a few careful changes, a return process can become a business advantage. Listen to your customers’ return needs, communicate your policies clearly and gather data to inform your most important reverse logistics decisions. Then watch your business grow.
1Khalid Saleh, “E-commerce Product Return Rate – Statistics and Trends [Infographic],” Invesp, April 5, 2016.
2Note: This statistic is based on a survey or projections.
3“2016 Holiday Survey: Ringing in the Retail,” Deloitte LLP.
4Ibid.
5Daniel Burstein, “E-commerce Chart : How Millennials and Baby Boomers want you to improve the shopping experience,” Marketing Sherpa, January 5, 2016.
6Ibid.
7Allan Pulga, “How E-tailers Personalize Outfits to Customers' Taste,” iQmetrix, August 11, 2015.
8Narayan Janakiraman, Holly Syrdal, Ryan E. Freling, “How to Design a Return Policy,” Harvard Business Review, August 2, 2016 (Updated September 9, 2016).
Lower Return Rates with a Data-Driven Approach
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