Should Zara (and other retailers) be charging for online returns?
Zara in the UK has started charging a fee of £1.95 ($2.39) to return merchandise bought online. The fast-fashion retailer reportedly instituted the charge for environmental reasons.
Zara deducts the refund charge from the refund. Customers buying items online can still return them for free in stores. Mailed returns in the U.S. are still free for 30-days post purchase.
A Zara spokesperson told the BBC, “Customers can return online purchases at any Zara store in the UK free of charge, which is what most customers do.”
A survey of U.S. online buyers from eMarketer taken last November found only nine percent returning merchandise in store when asked about their most recent return. The most popular return route was mail, cited by 37 percent; followed by alternative drop-off location (e.g., pharmacy, locker), 20 percent; and returned to a different retailer (e.g., Amazon/Kohl’s), 15 percent.
Online returns are rising and are seen as a margin killer for online selling. A recent Pitney Bowes survey of U.S. online retailers found returns cost retailers an average of 21 percent of their order value. The National Retail Federation (NRF) found that 20.8 percent of goods bought online were returned in 2021, up from 18.1 percent in 2020.
Zara risks disappointing customers who gain confidence in making an online purchase when they see free shipping and returns. Power Reviews’ 2021 returns study found consumers indicating free shipping (96 percent) and free returns (76 percent) as important considerations when shopping online.
An analysis by parcelLab in early 2021 of the NRF’s top 100 U.S. e-commerce sites found slightly more than a majority of retailers offered returns for free or with a “no need to return” policy. Of the 43 percent of retailers charging for returns, 59 percent charged more than $10.
Among those charging for mailed returns in the U.S., Uniqlo charges $7, Urban Outfitters, $5; J. Crew, $7.50; Lands’ End, $6.95; and L.L. Bean, $6.50. Belk and Wayfair customers are responsible for return shipping costs.
Growing environmental concerns may lower consumers’ expectations around free returns. A recent study from Cycleon found almost two-thirds (64 percent) of U.S. consumers willing to pay extra when returning a parcel to subsidize greener carrier options.
- Zara starts charging shoppers for online returns – BBC
- Why Zara charging for online returns may backfire – eMarketer
- Shoppers divided over Zara’s new returns policy that charges – Independent
- Pitney Bowes Survey: Returns Cost US Online Retailers 21 percent of Order Value – Pitney Bowes/Business Wire
- Retail Returns Increased to $761 Billion in 2021 as a Result of Overall Sales Growth – National Retail Federation
- Goods returned by US consumers surged 78 percent in 2021 – Financial Times
- Consumer Survey: Returns in Retail in 2021 – Power Reviews
- Five Differences Between U.S. and European Online Returns Habits – Supply Chain Brain
- Do retailers need to further commit to free delivery? – RetailWire
- Comparing Operations Experience in US Retail – parcelLab
- Consumer Preferences For Sustainable Returns – Cycleon
DISCUSSION QUESTIONS: How likely is it that large numbers of retailers will start to charge for the shipment of returns? Will U.S. consumers become more accepting of being charged for online returns based on environmental concerns or some other factor?