End of Free Returns: What Shoppers Need to Know
Say goodbye to stress-free returns! Returning a disappointing holiday gift might add to your disappointment Find out why free returns are becoming a thing of the past
Considering returning a disappointing holiday gift? Prepare for potential disappointment as more retailers are now charging fees for returns, impacting their profitability. While free returns have become the norm, this is changing as retailers feel the squeeze on their bottom lines.
Companies such as Macys, Abercrombie, J. Crew, and H&M have implemented shipping fees for mail-in returns. This trend is not limited to big mall brands, as eighty-one percent of merchants are now charging a fee for certain return methods, as reported by Happy Returns, a logistics company specializing in returns.
Amazon has implemented a new policy where customers will be charged a $1 fee for returning items to a UPS store if there is a Whole Foods, Amazon Fresh grocery store, or Kohls closer to their delivery address. (Amazon owns Whole Foods and Fresh, and has a partnership deal with Kohls.)
A woman looks through the few items left on the shelves at a Rite Aid store in Alhambra, California, on October 18, 2023. The store is set to close next Monday as part of the US pharmacy chain's restructuring plan after filing for Chapter 11 bankruptcy. The company plans to shut down nearly 100 stores nationwide, including 31 in California. (Photo by Frederic J. BROWN / AFP) (Photo by FREDERIC J. BROWN/AFP via Getty Images)
In 2023, seven well-known companies filed for bankruptcy. Additionally, Amazon has begun labeling items on its website that are frequently returned, specifically those with significantly higher return rates for their product category.
In recent years, return rates have surged as online shopping has increased. According to experts, shoppers are more inclined to return items they haven't seen or tried on in person. Data from the National Retail Federation shows that in 2022, customers returned nearly 17% of the merchandise they bought, amounting to $816 billion, a significant increase from the 8% return rate in 2019.
Businesses are forced to absorb expensive shipping costs for customer returns, resulting in a potential loss of profit. Returned items may languish in warehouses or on store shelves, forcing retailers to heavily discount them in order to sell, further impacting their bottom line. Many returned products ultimately end up in liquidation warehouses or even landfills, posing an environmental hazard.
Stores are allowing customers to keep their returns in cases where the shipping cost for the return is high, particularly for low-priced bulky items like furniture, kitchen appliances, home decor, baby chairs, walkers, strollers, and similar items. This is due to the increase in retail sales, which saw a 3.1% increase from Nov. 1 to Dec. 24 this year compared to the same period last year according to data from Mastercard SpendingPulse.
