Looking to return a dress that you bought online, or a home décor item that doesn’t quite match with the rest of your room? Returning them may not come free as retailers struggle with financial and logistical squeeze. While some are introducing charges, others are on the hunt for alternatives.
Some companies like Abercombie and Fitch, Uniqlo and H&M have already started charging for online returns. Uniqlo, for instance is currently charging $9.9 plus taxes while H&M that accepts return-in-store, has a rate of $4.99 for non-members returning items via mail. Abercrombie and Fitch accepts in-store returns too, but will deduct $7 from your refund for online returns.
Why are retailers ending free-returns?
A recent U.S. survey of online retailers show that more that 40 per cent of online merchants found shipping prices to be their biggest challenge in 2022. More than a third expect that this year as well.
According to Sylvia Ng, CEO of online returns service provider ReturnBear, a lot of retailers get more than 20 to 30 per cent of their inventory and sales returned. “And, so that’s really what the crux of the problem,” Ng told Global News.
Coming out of the pandemic lockdown, consumers have gravitated towards bracket buying, said Ng. They buy multiple sizes or variations of the same item just to see what fits. Once they find the right fit, they return the rest.
“Everyone’s been used to buying online and we all have these expectations of how easy it should be to return something,” said Ng.
This practice not only makes it hard for retailers to manage online returns, but the burden of shipping costs also falls onto their shoulders, she added.
“We as Canadians are very geographically dispersed, so it does mean that our shipping cost generally is high,” said Ng. “For an average item to be going across the country, (the) cost (is) somewhere between 9 to $14.”
“When a lot of the items are being returned and we need the shipping going back and forth, it is a lot of costs that we’re looking at.”
What are the alternatives?
Some companies have already started looking for alternatives. In January, the Bay announced its partnership with online return service provider ReturnBear through which customers can drop off items at a designated location and get a refund quickly.
“With the drop-off network, we’re already reducing packaging,” Ng said. “The weight of you putting that on a truck and the extra fuel needed to ship packaging around is already (gone).”
ReturnBear will take all of the items and then bulk ship those, explained Ng, which is “better for fuel efficiency and cost savings.”
“(We) are basically reducing or taking the waste out of the system, I’ll say, and leveraging excess capacity where we can,” Ng said.
Canadian clothing brand Good for Sunday has created an eco-friendly return alternative called the Eco Drop, where they match a customer that wants to return an item with the next online order, completely removing the need for a shipping trip.
Eco Drop is powered by Toronto-based startup Frate, a returns management platform that enables peer-to-peer returns.
“Specifically, when an end-consumer wants to return an item, they go through the retailer’s returns portal that we build for them,” Frate founder and CEO Bailey Newton told Global News.
Instead of shipping the returned item back to the company, Good for Sunday sends customers who are looking for a return a pre-paid label, so they can send the item directly to the next person that wants to buy it.
“It’s just not financially sustainable for small businesses in Canada to match the returns expectations that large retailers have set for us,” Anthony Kendriss, founder of Good for Sunday told Global News.
“We already have higher costs of goods due to keeping our manufacturing in Toronto versus going overseas, and we have higher quality, sustainable materials that we use.”
Cost to the environment
Kendriss said “the typical return systems” are not good for the environment either. Not only do they contribute to packaging and shipping waste, but the practice also encourages overpaying.
Sustainable fashion advocate Kelly Drennan agreed.
Drennan, who is the executive director of Fashion Takes Action, said consumers also need to change their shopping behaviour.
“When you get into the cheaper, faster, fast fashion pieces, the actual cost of the human to restock that piece is more than the value of the actual item,” Drennan told Global News.
Online shopping and ensuing returns produces a lot of waste, said Drennan, as some returned items end up in the landfill because of the costs involved with inspecting and re-stocking items.
However, she thinks that with some retailers no longer offering free returns, consumers are likely to rethink how many different-sized items they are purchasing just so they can try out the best fit.
“At the end of the day, we’re actually over-consuming,” Drennan said. “We buy 60 per cent more clothes today than we did 20 years ago, and we only keep our clothes for half as long as we used to — and that’s a problem.
“The most important thing that we can be doing to reduce our (carbon) footprint and to be more sustainable with our wardrobe is to stop buying as much as we’re buying,” said Drennan.