Returns Cost Sellers a Whopping 21 Percent of Order Value

Pitney Bowes is out with research that shows returns are a greater challenge for sellers than ever before. It surveyed medium- and large-brands and found online returns cost retailers an average 21% of order value – with several brands reporting considerably higher ratios.

The financial burden is compounded by the fact that ecommerce return rates are at historic highs, according to Pitney Bowes. Citing the National Retail Federation, it said returns jumped from 18.1% in 2020 to an average of 20.8% in 2021.

“One of the grand ironies of ecommerce is that both retailers and consumers struggle with returns because each sees the other as making the process more difficult,” said Vijay Ramachandran, VP Market Strategy for Global Ecommerce at Pitney Bowes.

According to Pitney Bowes’ BOXpoll survey, 70% of retailers say they are actively trying to lower the cost of returns by addressing transportation and/or processing costs.

The findings lay the foundation for a forthcoming series of BOXpoll surveys of both online retailers and consumers that will explore the best balance of convenience and friction for returns processes.

Details can be found on the Pitney Bowes blog, which described “future rounds” of surveys that will evaluate additional returns strategies: “For instance, do printerless options risk opening the returns floodgates? What kind of Return Material Authorization (RMA) processes discourage returns without harming brand perception? Is offering instant store credit as an alternative to a delayed refund an effective strategy? And is there a world in which the consumer will cover the cost of return shipping and come back for future orders? (Our hypothesis: Yes, if the cost of shipping is deducted from a refund rather than a direct charge.)”

Just as interesting as the challenge of returns on sellers is Pitney Bowes’ findings about shoppers’ perceptions of delivery speed. It launched several BOXpoll consumer surveys and found how perceptions have changed over the past two years:

• In October 2020, shoppers had come to expect delivery delays due to COVID-19, and their definition of “fast” shipping was slower than it had been pre-pandemic.
• By late April 2021, consumers’ definitions of “fast” had slowed further, extending by about one-third of a day for most product categories.
• As of February 2022, BOXpoll surveys had found the definition of “fast” has shifted back to similar expectations from October 2020—but remains slower than pre-pandemic expectations. The current definition of “fast” is 3.1 days for all products in general.

It will be interesting to see how delivery speed expectations change going forward.

Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.