Are Stricter Return Policies Worth It?

Blue Yonder's 2024 Consumer Retail Returns Survey found that tighter return policies are starting to deter consumers from making purchases, particularly younger ones.

Among the findings from the survey of more than 1,000 U.S. consumers taken in July:

• Of all respondents, 91% acknowledged that a lenient returns policy influences their buying decisions, up from 71% in the 2023 survey.
• Of consumers who are aware of stricter return policies, 69% said that tighter policies are deterring them from making purchases, up from 59% in 2023. Among Gen Zers and millennials, 76% and 74%, respectively, indicated that tighter policies deterred purchases.
• When asked about tighter policies, 51% of all respondents felt restrictions on returns are either inconvenient or unfair, while 37% found them fair and understandable.

The stricter policies are far from only impacting serial returners, or consumers who deliberately over-purchase to take advantage of free delivery and returns. Of the respondents to the survey, over half (56%) reported making a return only once or twice a year or less. Meanwhile, 22% of respondents said they make a return every few months, 6% once a month, and 6% every couple of weeks or more. Only 10% have never returned an item.

Retailers in recent years have been taking additional measures to tackle escalating return costs partly tied to e-commerce growth. According to NRF and Appriss Retail, total returns for U.S. retail amounted to $743 billion in 2023, or 14.5% of overall sales. Return rates for online purchases were 17.6% versus 10% for in-store purchases.

Return costs can include shipping, restocking, and reprocessing fees, along with the possibility of having to significantly discount or fully write off the item, depending on the timing and condition in which it is returned. Blue Yonder's survey found that 72% of consumers have been told to keep unwanted items to help the retailer avoid the high cost of reverse logistics.

Steps being taken to reduce the cost of returns include charging for mailed returns while enabling free in-store drop-off, increasing free shipping thresholds, shortening return windows, partnering with return aggregation services like Happy Returns and Narvar, and using fit technology to reduce sizing errors.

“Where the goal is to mitigate the cost of returns, retailers should be looking for ways to do more than tightening their policies to reduce returns rates,” said Tim Robinson, corporate vice president of returns for Blue Yonder, in a statement.

Other findings in the Blue Yonder survey:

• Return causes: Consistent with last year’s survey, 75% of respondents cite the most common reason for returns is incorrect sizing. Other reasons include item damage, 68%; changing one's mind or disliking the item, 49%; and receiving the wrong product, 47%.
• Return fees: About a third (32%) said they would not return an item if there was a fee. Among the remainder, 27% said they’d pay a fee of $1 to $5 to return an item, 10% said they would pay $6 to $10, 15% would pay $11 to $15, 13% would pay $16-$20, and 3% would pay more than $20.
• Third-party returns: When asked what factors would make them use a third-party returns service (i.e., drop-off location, drop-off mailing service), 62% said lower or no shipping fees, 60% said the convenience of drop-off locations, 47% said faster refund processing, 39% said assurance of hassle-free returns, and 38% said reliable tracking and confirmation of returned items.
• Sustainability: A slight majority (55%) are very or somewhat concerned about the environmental impact of returns. When asked what action they would take if they knew their returned item would go to a landfill, 36% would seek an alternative, eco-friendly disposal method, 35% would attempt to resell the item, and 27% would continue with the returns process as planned.