With so many of us shopping online these days, we’ve grown accustomed to the terms “free shipping” and “free returns”.
Research shows that 96% of consumers want free shipping, while 76% want free returns for their online purchases.
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But now global fashion house Zara has announced that it is scrapping its free returns policy for online shoppers.
“Consumers won’t like this change,” said Macquarie University marketing and consumer behavior expert Professor Jana Bowden.
“They’re used to free shipping and free returns. [and] any additional cost is a blow to their hip pocket.
While it may seem as simple as sending the item back and selling it to someone else, the truth is that the cost of returning items can be staggering.
“Consumers return a lot of products online, so for retailers, returns are very expensive,” Bowden said.
And at what price?
Approximately 70% of returned garments cannot be sold at their original price, leaving only 30% of returned items that can actually return to the store.
The actual cost to retailers is around 20% of the order value.
“Given the current cost to retailers, it’s likely other retailers will follow suit and start charging for shipping returns,” Bowden says.
Returning online shopping also has an environmental cost, with the return trip adding more carbon emissions to the atmosphere.
It’s a big problem that a small business owner in Melbourne is on a mission to solve.
As online shopping habits changed during the pandemic, Miso Jung noticed a huge increase in online returns at her clothing store, which cost her financially.
“Online returns cost around $25-30 – this includes shipping, labor to handle returns and often the product comes back damaged and it comes back quite late so we can’t sell it at full price” , Jung said. Sunrise.
But for Miso, it wasn’t just a matter of business cost, it was also environmental impact.
So she launched On Fleek Rewards, a program that rewards you for not returning your online purchases.
After the return period has passed, points are added to your account, encouraging consumers to be conscious and sustainable buyers.
“You can either use the points to plant a tree to offset your carbon footprint or buy a gift certificate,” says Jung.
Miso also has a message for the millions of people who shop online.
“Please be a conscious consumer and think about the environment for our future – buy smarter and kinder.”
In the United States, where Amazon reigns supreme in the online shopping space, nearly 3 billion kilograms of landfill waste are generated from returns from online purchases.
The US National Retail Federation estimates that a record $761 billion in merchandise was returned to online retailers in 2021.
It’s such a widespread problem that many retailers are now choosing to clear stock rather than deal with returns.
Clearance warehouses buy returned products from retailers in bulk at a discounted price and then resell those items to resellers.
The catch is that buying a clearance box or pellet is a fluke – shoppers could end up with high-end fashion for cheap or broken tech items with little value of resale.
Although not yet common in Australia, the “second-hand inventory” industry has grown in the United States, with sales more than doubling over the past decade.
If Australian retailers can convince consumers to be more attentive to their returns, it may not be a growing industry here in Australia.