Gift giving spikes during the holiday season.
Thanks to the Internet and e-commerce, your uncles and aunts, grandparents, and well-meaning family and friends can not only send you horrible gifts you don’t want, but also give you time to pretend you like it. The process has become easier in many ways. .
In many cases, gift-exchanging is now a thing of the past, and we no longer have to pretend to be happy when someone sends us an ugly sweater, a novelty tie, a book of poetry by a celebrity who isn’t a poet, or any other lousy gift.
Related: Costco members get bad news for the holidays
This is a change that could improve your relationships with friends and relatives who don’t know you well enough to buy you a decent gift. However, this is a problematic situation for retailers. Poor-quality gifts, gifts that don’t fit, and gifts that have no use can lead to returns.
Returning products costs retailers money and inconveniences customers. This is no small problem. Globally, in 2022, $816 billion in retail goods were returned, according to a report by the National Retail Federation.
NRF reported that “the average retailer incurs $165 million in returns for every $1 billion in sales.” Of the $816 billion in returns, approximately $212 billion will come from customers who returned digital orders.
The average return cost for retailers is $30, so Amazon (AMZN) – Get your free report, Walmart, Target, and other big retailers have a solution. They just don’t want you to know.
Major retailers have no-return policies
In some cases, it may be cheaper for a digital retailer to simply tell the customer to return the item without having to return the item.
According to return service company goTRG’s Returns Report: Holiday Forecast for 2023 report, “Large retailers have unleashed a strategic approach that allows customers to keep certain items without having to return them. This is especially common in low-priced products.” .
This is called a “keep it” policy and, if used correctly, can be beneficial for retailers and consumers.
“For example, 27% of retailers believe that items priced up to $20 qualify for a ‘keep it’ policy, recognizing that shipping and processing costs often exceed the value of the item. ”, the report states.
“This strategy not only reduces logistics expenses, but also strengthens customer loyalty and trust. Our research shows that a remarkable 59% of retailers report returns that are not economically viable to return. responded that they have adopted such a ‘leave it’ policy.”
Amazon, Walmart, Target (target) – Get your free reportWayfair, Chewy, Kohl’s and Shayne are the most commonly cited companies with “keep it” or “no returns” policies, according to data from returns technology provider Narver.
There are some major drawbacks to “leaving it alone”
No-refund returns may save costs by letting customers keep their items, but it creates another problem and ignores what’s actually going on.
Neil Saunders, managing director at Global Data Retail, said: “Although allowing customers to store their products may hurt revenue less, the impact of essentially giving away products for free is Still there,” he wrote on RetailWire.
“Of course, this can be considered a cost of doing business online, but it doesn’t solve the underlying problem: retailers are struggling with apparel sizing consistency, lack of product detail, and poor quality.” We need to better address why returns are being made, such as photos, etc.”
“Keep it” policies could also unintentionally exacerbate the return problem, he said.
“Another problem with ‘keep it’ policies is one of moral hazard, which can lead people to abuse the system and think less when purchasing products.” he added.
Bob Amster, a 45-year veteran of the retail industry, agrees.
“The concept of ‘leave it alone’ is just one finger in the dyke of misguided return policies,” he wrote. “While this is the lesser of two evils (the retailer pays for shipping and return processing, or the retailer gives the product away for free), this is not how business should be done.”
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