E-commerce return rates are rising, and the amount of returns in the United States will reach 761 billion US dollars in 2021

With the rapid development of e-commerce around the world, competition between e-commerce platforms and sellers has become increasingly fierce. In order to improve consumers' shopping experience, many platforms and sellers are working hard to improve their after-sales services. With the rising return rate of e-commerce, returns are also becoming a major problem for e-commerce platforms.

U.S. returns hit $761 billion in 2021

According to a survey by the National Retail Federation, American consumers returned $761 billion worth of merchandise to retailers in 2021. This amount has exceeded the U.S. defense spending in 2021, reaching a record level.

These growing number of returned goods are increasing the operating costs of e-commerce platforms, and Amazon, the e-commerce leader, is also deeply troubled. Although Amazon has not officially released relevant data, the National Retail Federation estimates that during the 2021 holiday shopping season, approximately 16.6% of the goods sold were returned, an increase of more than 56% over the previous year. The return rate for online shopping is as high as 21%, far higher than 18% in 2020. In 2021, Amazon's net sales revenue was US$469 billion, which shows that Amazon has a large number of returns every year.

In addition to adding additional operating costs to e-commerce platforms, these returned goods also cause huge problems for the earth's environment. According to Optoro, a provider of return solutions , returned goods in the United States generate about 16 million tons of carbon emissions in reverse logistics each year, and up to 5.8 billion pounds of landfill waste.

Since the returned goods cannot be resold in their original form in most cases, and the labor and storage costs during the return process may even be higher than the goods themselves, these returned goods are likely to be sent directly to the landfill. Amazon said in an interview that it will not send any items to landfills, and "energy recovery" is their last resort.

The return experience is improved, but problems arise

In 2018 , a survey of 1,300 online shoppers found that 96% of respondents would make repeat purchases if the store provided a good return experience . On the contrary, if shoppers were required to bear the return shipping costs themselves, 69% of respondents would simply give up the purchase .

It is clear that consumers prefer merchants with friendly return and exchange policies. In this context, Amazon also expanded its free and easy returns to millions of products on the platform in 2019 .

Amazon users can now return items at 18,000 locations, including Kohl's , UPS and some Whole Foods stores , and can also return items with missing original packaging and labels. Amazon Prime members can also enjoy the " try before you buy " service , and Amazon will send the return label to users along with the original packaging . Amazon is even gradually allowing users to get a refund without returning the item.

In this regard, Zach Rogers, a professor of supply chain management at Colorado State University , said that Amazon has changed the rules of the game in the field of reverse logistics, and now traditional retailers such as Walmart and Target are implementing similar policies, which is an important manifestation of retail competitiveness .

However, while providing good return and exchange services to platform users, Amazon has to solve a series of problems caused by returns .

In 2021, Amazon's logistics expenses are close to $152 billion, accounting for nearly one-third of its total net sales , an increase from $119 billion in 2020. Return logistics expenses account for a large proportion of this , and Amazon is trying its best to reduce these costs to increase actual profits.

In addition to increasing Amazon's operating costs, the easy and convenient return method also seems to have caused dissatisfaction among some Amazon sellers. On the Amazon official forum, many sellers said that Amazon's return method does improve consumers' shopping experience, but it has damaged the interests of sellers to a certain extent.

Seller A: You should expect returns on all items because if you refuse to offer returns, people will just request a refund only and then you will lose both money and merchandise.

Seller B: These easy return methods only increase the number of fraudulent buyers. Consumers can drop your item out of a high-rise building and send it back for a full refund, and Amazon will not protect you.

Make the best use of things, and various return processing methods emerge

The booming second-hand market economy has made it easier to make money on used goods . According to Colorado State University survey data, the size of the second-hand market was US$688 billion in 2021 , up from US$649 billion in 2020.

With used goods becoming a potential cash cow , Amazon launched two new return programs in 2020. It offers sellers the option to liquidate returns, sending them to Liquidity   Services to auction them off on the secondary market.

Also in 2020, Amazon began offering a return and resell option to select sellers. Through this option, Amazon evaluates the returned item and gives it a score — like new, very good, good or acceptable — and then resells it in a specific section of its website .

These websites have warehouses that sell second-hand goods   Deals, Amazon for refurbished goods   Renewed, Amazon selling overstocked products   Outlet, and a daily deals site called Woot that sells $ 10 “ junk bags .” Amazon even offers customers gift cards in exchange for their used Amazon devices, which it tries to refurbish and resell.

In addition, Amazon also launched a donation program in 2019 that allows US sellers to donate excess and returned goods to local charities through cooperation with the non-profit network Good360 . The organization works with about 400 companies including giants such as Walmart , CVS and Nike , but Amazon is its largest donor.

According to Good360, nonprofits pay it to cover the shipping costs of picking up items from more than 230 Amazon locations , but they are not allowed to resell the items donated by Amazon , list them on auction sites, or sell them at flea markets .

In addition to reselling and donating, "liquidation stores" are also quietly emerging. In liquidation stores opened in Ottawa, Canada, more and more residents are flocking to these stores for "real-life treasure hunts." These stores sell overstocked goods and returned goods from some mainstream online retailers. If you are lucky, consumers can find high-quality goods at low prices.

Independent research firm Shore-Tanner   and   Barry, Director of Associates   Nabatian said this needle-in-a-haystack shopping experience is becoming increasingly popular in Canada. For large e-commerce platforms like Amazon , processing returned goods can be a significant operating cost, and liquidation stores such as " Quick Pick " can help these online stores offset some of the costs.

In fact, for cross-border sellers and e-commerce platforms, thinking about return-related issues is not the most important thing, but finding ways to reduce the user return rate is the top priority. Optimizing and improving product quality in many aspects and satisfying users once and for all is the real way to retain customers.

Amazon

E-commerce returns

Resale