It is perhaps the biggest misconception in e-commerce: free returns. Although it may sound attractive, we have to face the fact that returns are not free at all. Just as it costs money to ship a parcel from A to B, it also costs money to transport it back from B to A. The fact that consumers often don’t bear these costs themselves, doesn’t mean they don’t exist. At the end of the day, someone has to pay the bill…

For a long time retailers took the return costs on their own account, but it seems very likely that the e-commerce industry is putting an end to the era of free returns. The recent announcement by Zara to start charging customers for returns may result in a domino effect amongst retailers and maybe that’s not so bad at all. But why are free returns still the norm today?

The era of free delivery and returns

In the early days of e-commerce, online retailers started offering free delivery and returns to make online shopping more appealing to consumers. Back then online shopping wasn’t as common as it is today, and retailers wanted to lower the threshold for online shopping to make it as easy as possible. Since consumers didn’t have to pay delivery or return costs in-store, lowering these costs could help to convince them to shop online.

By offering free delivery and returns, platforms like Asos and Amazon were able to gain a huge market share. Due to their economy of scale these e-commerce giants were able to minimise their logistics costs per parcel, making it much harder for small merchants to compete with the big guys. As a result, free delivery and returns quickly became the norm in the entire e-commerce world. Hence, you can’t blame consumers for becoming increasingly demanding and spoilt: for a long time e-commerce giants offered them ultimate flexibility and service in a battle for market share, without charging for it at all.

The headache of reverse logistics: from B to A

Consequently, a lot of consumers have lost sight of the fact that there is a considerable amount of time and money involved in the entire shipping and return process. From the cost of the packaging and the employee who packs it all up to the delivery man who, in the worst case, has to make several delivery attempts to get the order to the consumer. Not to mention all the extra handling involved in returning a parcel, with online retailers struggling to cover the loss of revenue, as well as the logistical process of returning products. It’s time for a change. However, it’s not that easy to change the norm from free to paid returns. According to the Sendcloud E-commerce Delivery Compass 85% of UK shoppers regularly return a product if they are not satisfied. On top of this, over half (55%) of consumers expect that the retailer should cover the return costs.

But what if this phenomenon is slowly dying out? Here are three reasons why it is time to make paid returns the standard:

1. Guaranteed return

The downside of free returns is that it encourages consumers to actually use them. Since a return is free of charge anyways, why not order an item in duplicate or triplicate and judge the ideal size and colour at home? With return periods ranging from 30 days (Zara, H&M) to 60 days (Shein) consumers have plenty of time to test their ordered products with peace of mind and only pay for what they actually keep. However, the downside is that if a consumer places an order in three different sizes, it is already clear from the start a return shipment is inevitable. If merchants would use return data cleverly to improve their product information, a lot of these returns could be avoided from the start. Implementing a return fee on top of would invite consumers to rethink their own order- and return behaviour as well.

2. Little awareness

When you add up all the costs associated with a return order, retailers are actually bleeding money from e-commerce returns, with an estimated £5.2 billion a year on average. Although free returns might be a nice teaser for consumers, doing the maths quickly shows that it is impossible for retailers to cover these costs in the long term. With parcel volumes and return flows increasing year on year, return costs are skyrocketing. Nevertheless, a lot of consumers still seem unaware of the price tag associated with a return order. Implementing a small return fee can already help to trigger consumers to rethink their return behaviour. Boohoo has been charging its consumers for quite some time now, and while their return fee of £1.99 is mainly symbolic, it encourages consumers to think twice before placing and returning an order. 

3. Go green

In a world where sustainability is becoming increasingly important, it is remarkable that we still take returns for granted. Returned items travel a longer distance on average (both out- and inbound) and are (re)packed at least twice: an expensive process that above all is bad for the environment. As our research shows that the majority (84 percent) of consumers return a parcel regularly, you can imagine the impact of this. Consequently, both consumers and merchants have to start thinking about the impact of returns on the environment and how to decrease this.

All in all, free returns will no longer be a given and it is time to change course. Not only are paid returns an important step in reducing logistics costs, they also offer an opportunity for the entire e-commerce industry to critically examine our own return behaviour.

By Rob van den Heuvel, CEO and Co-founder at Sendcloud

By Alison