We’ve Created A Monster: Retail’s Growing Returns Problem

Product returns and exchanges have been the nemesis of the direct-to-consumer industry going back to the mail order catalog days. For products that are fit and/or fabrication sensitive (think fashion, intimate apparel, shoes) returns often exceed 30%, and rates north of 40% are not unheard of. Back in the good old days, while high return rates were definitely an area of concern, the fact that the customer often paid “shipping & handling” costs helped soften the damage to the bottom line. In fact, for some brands, shipping & handling was actually a profit center. Today? Well, not so much. More and more free shipping is becoming the norm. Many “disruptive” brands have made free shipping “both ways” an intrinsic part of their business model. And as the holiday season approaches we are about to enter a period where free shipping offers will practically be tables stakes. In fact, Target has already announced that it will offer free 2-day shipping beginning November 1. None of this bodes well for turning the tide on returns. Read more at Forbes.