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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%

8% of all merchandise purchased in 2015 was returned.1

$260.5 Billion

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:

10.5%

Apparel

11.35%

Home Improvement

21%

Auto Parts

9.56%

Footwear

12.29%

Housewares

5.21%

Beauty Products

9.88%

Children’s Apparel

14.05%

Department Store

9.25%

Sporting Goods

11.13%

Women’s Apparel

12.33%

Hard Goods

Online vs. In-Store Return Rates

Shoppers returned online purchases 8X more frequently than those they bought in-store.

25% Return Rate
vs.
3% Return Rate

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%

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%

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
40% of 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

Shopping Basket
  • 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

Shopping Cart
  • 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. 1

    To prevent returns because of poor quality, routinely check the quality of products and discontinue selling poorly made/poorly reviewed products.

  2. 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. 3

    To prevent customers from finding better prices elsewhere, consider price-matching offers and periodic sales to drive customers to purchase.

  4. 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. 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. 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. 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. 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.

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