The economics of online returns

Are there any words sweeter than "free shipping?" But with new return policies in place, just because you got your items shipped for free doesn't mean sending them back is on the house too. 

Driving the news: Those late-night shopping binges we all grew to love during the pandemic are no more, as more retailers start charging customers to return online purchases.

  • Buying multiple sizes of the same garment became a regular practice for most who thought, "meh, I'll just return whatever I don't want."

  • But that buy now, decide if I like it later mentality has eaten into retailer's bottom lines. Sylvia Ng, an executive at Return Bear, said that some retailers were experiencing 20% to 30% return rates. 

Why it's happening: Returns are expensive. Not only are stores giving the customer back their money, but there are added costs around shipping, logistics and warehousing. 

  • Returns cost retailers 21% of the order's value, and online returns outpace "brick-and-mortar" returns threefold, per Canadian Business.

  • The most common reason for online returns is unflattering fit and style or poor quality since you can't touch, feel or try stuff online. 

If you do buy online with a return fee, here are some tips to avoid paying an unpleasant extra cost:

  • Know your size. And if you're not sure, invest in a measuring tape—most sites have their sizing charts available online, so you can order the correct size the first time. 

  • Stick with what you know. You should buy from brands you know and love online, so you're not surprised by poor quality and construction.

  • Be aware of closing windows. I would have bet my firstborn that Gap's return window was 45 days—so you can imagine how shocked I was to walk in on day 44 and be told that I was two weeks late. (I still got my money back, don't worry guys)

Bottom line:  You’ll now have to factor into the potential costs of returning an item you buy online to figure out how much it’s actually going to cost—for items like clothes that you’ll want to try on, it might be worth just heading to a shop in-person rather than risking it.