The e-commerce sector is grappling with a surge in product returns, a trend that is squeezing profit margins and forcing retailers to reassess their policies. This shift comes as consumer expectations for frictionless returns clash with retailers’ need to maintain profitability and reduce environmental impact.
ASOS, the online fashion retailer, recently announced it would start charging for returns, signaling a broader industry move to curb what some are calling “refund fraud”. This includes practices such as “wardrobing” – wearing items before returning them – and “bracketing” – purchasing multiple sizes or styles with the intention of returning most items.
Lee Thompson, CEO of fulfilmentcrowd, a global fulfilment provider, told FashionUnited: “The number of items returned by consumers is increasing at the same time as customers’ expectation levels and desire to reduce carbon footprints grow.” He added that the rise of buy-now-pay-later (BNPL) services has inadvertently contributed to a “Try Now, Pay Never” phenomenon, particularly in the fast-fashion sector.
Data from fulfilmentcrowd’s platform reveals that between April and August 2024, 76 percent of customer inquiries were related to order tracking, while 22 percent of returns were due to items no longer being required.
The financial implications for retailers are significant. Austin Waddecar, Chief Product Officer at fulfilmentcrowd, said: “Many retailers are cracking down on mass customer returns due to operational costs, inventory management, environmental impact, and fraud prevention.”
Consumers prefer free returns
However, retailers must balance these concerns with consumer expectations. The research indicates that shoppers prioritise free returns, ease of return, and immediate refunds. Complexity, costs, and slow refunds are major pain points that can deter future purchases.
As e-commerce continues to evolve, retailers are likely to implement more sophisticated return policies and technologies to mitigate losses while maintaining customer satisfaction. The challenge lies in striking a balance between accommodating genuine returns and deterring abusive practices, all while managing the environmental impact of reverse logistics.
This shift in the e-commerce landscape could have far-reaching implications for the retail sector’s profitability and sustainability strategies in the coming years. As Chelsea Banister, Head of Customer Operations at fulfilmentcrowd, suggests, these policy changes may “support the reduction in mass purchasing and reduce the number of returns as a whole,” potentially reshaping consumer behaviour in the online retail space.
