The Cost of Returns: The Problem for E-commerce Retailers

Returns are a significant challenge for e-commerce retailers due to the high costs associated with processing and dealing with returned items. Approximately 10% of online purchases are returned, with this rate even higher for certain categories like shoes. This poses a financial burden on retailers as returns account for around 25-26% of their gross revenue. Free returns, which have become the norm in the industry, are not actually free, as there are costs involved in shipping, inspecting, grading, and reselling returned items. Companies are now considering how to make returns more sustainable and cost-effective, some by charging return fees or making the return process more arduous for customers.