Much of the retail industry’s annual costs in returns can be prevented, according to a new survey.
A research report from retail analyst firm IHL Group, commissioned by OrderDynamics, “Retailers and the Ghost Economy: The Haunting of Returns,” finds that quality problems/product defects are the leading cause of retail returns.
The report shows quality and defect issues account for $162 billion in returns worldwide, representing one in four retail returns and 1.1% of total retail sales worldwide. Sizing issues plague the retail apparel market, with more than $62 billion in global returns.
In all, the survey indicated that up to half of all retail returns are at least partially “preventable.” A total of $334.4 billion in returns are due to defects/quality, wrong sizing, the product didn’t match the online description, late shipment or the customer purchasing the wrong item (which in many cases can be improved by better online descriptions or better signage and training of associates in stores).
According to IHL’s research, the leading causes of retail returns are:
1. Defective/poor quality: $162 billion
2. Bought wrong item: $99.3 billion
3. Buyer’s remorse: $88.7 billion
4. Better price elsewhere: $83.4 billion
5. Gift returns: $64.1 billion
6. Wrong sizing on item: $62.4 billion
7. Return fraud: $28.2 billion
8. Didn’t match online description: $6.1 billion
9. Late delivery of items: $4.6 billion
10. All other reasons: $43.8 billion
“Merchandise returns can be a particularly vexing problem for consumers,” said Greg Buzek, president of IHL Group. “When merchandise is out of stock, shoppers typically just go elsewhere or purchase a different product. However, if they make a purchase and then have to return it because of poor quality, improper sizing, late delivery or it doesn’t match the online description, it’s not only frustrating but often leads to a consumer ceasing to shop with that retailer.”