You will be redirected back to your article in seconds
Skip to main content

E-Commerce Merchants Brace for Avalanche of Returns

If data from Returnly is any indicator, e-commerce retailers are facing a return season like no other.

Returns volume stood 3.3 times higher on Dec. 26 compared to an average day in the U.S., the return solutions provider reported. The bottleneck created by record-high volume, longer return windows and slower action from consumers is expected to push back shopper refunds and resale turnaround times, it added. On top of these factors, logistics companies now have to handle and transport Covid-19 vaccine shipments, further straining supply chains.

Though many consumers began the return process Saturday, brands should expect it to take longer than usual for items to ship. In January 2019, Returnly said it took shoppers close to seven days to mail returns. Due to longer return windows, fewer back-to-the-office routines and more people looking to avoid crowds, retailers should brace for an even larger gap and a longer return season, it advised.

“With record-breaking holiday sales, there is going to be a huge backlog of returns,” Returnly founder and CEO Eduardo Vilar said in a statement. “This leads to unpredictability and longer refund times for consumers, which can quickly erode the trust they established with a brand.”

Earlier in the holiday season, Returnly noted a bump after Black Friday. For the one week following that holiday weekend, it said it saw returns volume grow by 47 percent from the prior year.

Looking at November and December as a whole, CBRE estimated earlier this month that e-commerce returns could reach $70.5 billion, a 73 percent increase from the previous five-year average. By comparison, it predicted total holiday retail sales would reach $741.2 billion, a 1.5 percent increase from 2019.

Starting at the beginning of the pandemic in mid-March, Returnly said the time between placing an order and return creation “climbed aggressively week after week.” The average age of returns peaked in early August at 20 days, a nearly 100 percent jump from what it had observed at the start of the pandemic.

Related Stories

At the same time, online merchants have also extended return windows. In October, Amazon announced it would allow returns through Jan. 31 for items shipped between Oct. 1 and Dec. 31. The extension added a full month to the initial window of goods shipped to consumers. The expansion coincided with Amazon’s October Prime Day event, which, along with similar events from Walmart, Target and other retailers, was hailed as the start of the holiday shopping season.

More recently, the online marketplace made it even easier to return goods, allowing shoppers to make box-free, label-free returns at more than 500 Whole Foods Market stores. The expansion added to thousands of other physical checkpoints already available to consumers, including nearly 5,000 UPS Store locations and more than 1,100 Kohl’s stores.

In addition to returns trends, Returnly said it has observed deep discounts throughout the pandemic at direct-to-consumer brands. In April, for example, dollar volume of discounts given by merchants to incentivize sales grew 180 percent year over year.

Returnly’s data also showed a 7 percent drop in USPS market share as price increase announcements in August and October led e-commerce merchants to seek competitive alternatives. This shift, it noted, is also likely due in part to increasing concern around holiday delivery times.

Returnly based its analysis on return behavioral data of a random sample of 6 million online U.S. consumers 18 and older across six e-commerce verticals: apparel, accessories, footwear, jewelry, beauty and electronics.