Return policies could hurt retailers this holiday season

As retailers look for ways to reduce the hefty cost of returned items this holiday season, there’s one method that should be kept off the table: charging consumers for their online returns. That’s according to a report out this week by FarEye, which provides a software-as-a-service (SaaS) platform for delivery management.

FarEye surveyed 1,000 U.S. and UK consumers about their expectations for the returns process this holiday season and found that 90% said they will be cautious about shopping with a retailer that charges for returns. The survey also found that 50% of U.S. consumers and 32% of UK consumers said they will not pay for a return.

“These findings—amid reports of retailers looking to reduce the hefty cost of returns by charging consumers to return items—may result in lost customers and reduced brand loyalty,” according to a company press release detailing the findings.

FarEye Co-Founder and CEO Kushal Nahata added that retailers should look internally for ways to reduce the high cost of returns.

“Returns are a problem for retailers, costing on average 66% of the total purchase price, yet the retailer doesn’t see any revenue from the purchase,” Nahata said in the press release. “Putting the cost on the consumer is not the answer, however. Retailers need to take a critical look at their returns strategy to drive down costs in ways that do not impact the consumer, like offering multiple drop-off locations for returns to reduce carrier costs and drive efficiency. These survey findings—while not surprising—reveal a mismatch between retailers’ plans and consumer expectations.”

The survey also found that high return rates are here to stay, driven by recent changes in consumer buying behavior that have become permanent. The report found that roughly 61% of U.S. consumers and 51% of UK consumers made returns during the holidays last year, and that 42% of U.S. consumers and 53% of UK consumers anticipate making returns this holiday season. The practice of buying multiple items online with the intention of returning some is a driving factor, according to the report, which found that nearly 30% of U.S. consumers and almost half of UK consumers admit they plan to do so this holiday season.

Flexibility and convenience also reign supreme in the returns process. FarEye found that 84% of U.S. consumers and 82% of UK consumers expect to be able to make a return between 30 to 90 days from the date of purchase, for example. In addition, both U.S. and UK consumers say they would like to be able to return items in store as well as at a post office or drop-off point.

“Consumer expectations will no doubt remain high throughout the holiday shopping season—one of the most profitable and critical revenue time-periods for retailers,” Nahata also said. “As retailers continue to simplify the last-mile delivery experience, they cannot forget about the returns experience. This too should be just as simple as the delivery experience.”