Spiking holiday returns could lead retailers to adjust their policies

The stat: Shoppers returned 1.39 billion orders globally following the 2022 holiday season, a 63% increase year-over-year (YoY), per Salesforce.

Holiday hangover: After a relatively strong holiday season, retailers are beginning to feel the weight of returns as inflation drives more consumers to return online purchases.

• Merchants using Loop Return’s platform processed 133,000 returns on December 26 and December 27 alone, a 33% spike YoY, per Insider.
• UPS expects to handle 5 million more returns this year than last year, per Supply Chain Dive, which the company partly attributes to the convenience of returning items at The UPS Store locations.

A serious problem: Return rates are growing faster than revenues for 91% of retailers, per a survey by Appriss Retail and Incisiv. With returns rates rising so quickly—posing a serious threat to profits—more retailers are adding fees to help cover the costs of reverse logistics, despite previously fearing that charging for returns would turn off customers.

• Most—70%—of US consumers say they would be willing to pay more for a convenient returns experience, per a survey by Loop. Half say they already have.
• But free returns continue to be an important purchase consideration for 87% of US shoppers, per a survey by Happy Returns and TRC.
• These diverging data points indicate the need for retailers to move beyond a one-size-fits-all returns policy, and instead offer shoppers multiple options to improve convenience and the customer experience.

Looking ahead: We expect ecommerce returns volumes to grow 4.2% this year to $211.76 billion, as consumers continue to practice bracketing and budget concerns drive shoppers to be more selective with their purchases.