Returning holiday gifts? Most stores now charge return fees
- 81% of retailers are charging fees for mail-in returns
- Expert: Offering free returns is "not sustainable from a business lens"
- Last year, customers returned 17% of all purchased merchandise
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(NewsNation) — Planning on returning a disappointing Christmas gift? Sending it back could now cost you.
A growing number of retailers are now charging fees for mail-in returns as free returns squeeze retailers’ bottom lines.
81% of merchants are charging a fee for at least some methods of returns, according to Happy Returns, a logistics company specializing in returns. Macy’s, Abercrombie, J. Crew, H&M and others have added shipping fees for mail-in returns.
Amazon has begun charging customers a $1 fee for returns to a UPS store if there is a Whole Foods, Amazon Fresh grocery store or Kohl’s closer to the delivery address.
Kohl’s and Abercrombie and Fitch will charge $7 for mail-in returns, H&M will charge $5.99 if you’re not a loyalty member and Zara will charge $3.95. Stores like Macy’s, J. Crew and Neiman Marcus are charging up to $10 in mail-in return fees.
The change was motivated by the mounting cost of the initial sale and the cost of processing the return.
Analysts estimate that companies lose about 50% of their margin on returns, according to the Wall Street Journal.
Last year, customers sent back almost 17% of the total merchandise purchased, totaling about $816 billion, according to the National Retail Federation. Returns in 2022 were more than double the 8% of merchandise returns in 2019.
“We’ve all been enjoying really friendly consumer services over the last 10 years that have been really consumer-focused. But retailers offering a one-size-fits-all all return policy for 100% of customers is likely not sustainable from a business lens,” said David Morin, vice president of global customer strategy at Narvar.
According to Morin, each return costs retailers an average of $33 to process.
“So yes, many retailers are having to look at different strategies to make sure that they can still operate their business and grow their business and still offer consumer-friendly services,” Morin said.
After covering costly shipping fees when a customer sends an item back, those items sometimes end up back in retailers’ warehouses or shelves. Companies then have to mark down returned goods, further hurting profits.
In some cases, stores let customers keep their returned items. This typically happens for low-priced bulky items when it is too costly for the company to cover the shipping cost of the return.
