The rate of retail returns is expected to hold steady at $816 billion this year, according to a report from the National Retail Federation and Appriss Retail. Returns of items purchased online will be in line with those purchased from physical stores, the report said.
According to the report, retailers can expect 17.9% of the merchandise purchased this holiday season will be returned. That comes to nearly $171 billion in returned goods. The expected rate of holiday returns is more than a full percentage point higher than the 16.5% average return rate throughout the year.
For the first time since online data has been captured as part of the survey in 2019, online return rates are consistent with the overall return rate, the report said.
What’s more, online return rates dropped to 16.5% in 2022 from 20.8% in 2021.
Fraud and returns
For every $100 in returned merchandise accepted, retailers lose $10.40 to return fraud.
Of the approximately $212 billion in returned online purchases, $22.8 billion (10.7%) will be deemed fraudulent, the report said. Return fraud takes many forms, including the return of items after a single use (typically high-priced apparel.)
That’s roughly in line with the expected fraud rates from physical store purchases. Of the more than $3.66 trillion in expected in-store sales, $603 billion will be returned, the report said. Approximately $62.1 billion of those returns, or 10.3%, are expected to be fraudulent.
“The holidays typically include a spike in retail activity, but higher return rates can also impact profitability,” said Steve Prebble, CEO of Appriss Retail. “Retailers must look for ways to individualize the returns process through data-driven insights. This will minimize the risk of accepting fraudulent returns while enhancing the customer experience for loyal shoppers.”
The report is based on a survey of 70 retailers conducted by NRF and online fraud prevention vendor Appriss Retail from Sept. 19-Oct. 14.
Experts expected the drop in returns
The reports conclusion seems to coincide with what retailers and industry experts expected.
“We are expecting that our returns will stay proportional to our sales,” said Joshua Rich, digital fulfillment team leader at furniture retailer Freedom Australia. Rich said his team has put considerable effort into reducing returns by ensuring shoppers are happy with their purchase. “Decreasing returns is almost exclusively done prior to purchase. This can be things like making sure that product descriptions are correct, the quality is not inferior, colors match photos online, customers are happy with the service they have received. All in all, setting our customers’ expectations and meeting/exceeding them is crucial.”
A week before the report was released, Nicola Kinsella, senior vice president of global marketing at Fluent Commerce, said she expected the rate of holiday returns in 2022 to be roughly equal to that of 2021. Fluent Commerce sells order management and fulfillment services to retailers.
“I’d say it’s going to be very similar and for a couple of reasons. One is people are spreading out their purchases because retailers and brands are spreading out discounts. They’re starting their promotions early,” she said. “Because of that, people have had a bit more time to think about things and maybe returned something already that they might not have returned until a bit later.”
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