We’ve reached the point of no free returns, says ParcelHero
With the likes of Zara and Next now charging shoppers to return items by mail, the home delivery expert ParcelHero says we’ve reached tipping point, and soon there will be no free returns….
Zara’s announcement that it will start charging a return shipping fee is another nail in the coffin for free returns, says the home delivery expert ParcelHero. It says returns have been costing UK retailers around £60bn a year. One in three fashion items purchased online are now sent back and as the Covid online shopping bubble begins to deflate, ParcelHero says free returns are no longer sustainable.
ParcelHero’s Head of Consumer Research, David Jinks, says that ‘shoppers have had a good ride with free returns’. In fact the practice of “wardrobing”, wearing an item once and then sending it back, has almost become the norm for 10% of online shoppers.
As long ago as June 2018, Next announced it would start charging for return items picked up from home or a drop-off point. That followed an earlier study from ParcelHero revealing that many fashion stores reported an astonishing 60% of items ordered online over Christmas 2017 had been returned.
Analysts thought many more retailers would follow Next’s example, but the pandemic temporarily halted plans. Non-essential stores were not open during lockdowns to receive returns, and online retailers made profits large enough to absorb these costs.
Now that the Covid online sales bubble has, if not exactly burst, certainly deflated, free returns are again becoming too much for retailers to absorb. Ironically, just as online retailers are seeing profits fall, “wardrobing” is booming again now that people have resumed socialising.
Zara has finally followed in Next’s footsteps and decided it will also no longer be a fashion victim when it comes to covering the entire cost of online returns. Most online retailers admit the cost of free returns gobbles at least 13% of their annual profits.
Zara, like Next, won’t charge customers who return things to a physical store, but will charge for the use of pick-up points. Zara will charge customers £1.95 while Next, which currently charges £2, is raising its fee to £2.50 after 21 June.
Other stores have also started charging for returns. For example, Uniqlo introduced return charges in March 2021. Its returns, via Evri ParcelShop, cost £2.95.
‘“Wardrobing” is a headache for the likes of Zara, but it’s a make-or-break issue for smaller, specialist online marketplace traders,” says David Jinks. “They are frequently forced to take back obviously used items rather than lose their five-star rankings or consumer trust scores and, furthermore, can’t afford to take such cases to court. They will be very relieved to see major retailers finally taking a stand.”
But which will be the next major brand to follow Zara’s lead? In December 2021, Boohoo sobbed that its profits wouldn’t be as high as previously thought, due in part to “exceptionally high” returns. Logically, it may become one of the next retailers to introduce a returns charge.
For more information on the full impact of returns on retailers large and small, read ParcelHero’s report, ‘Retailers Reach the Point of No Returns’ at https://www.parcelhero.com/