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Online stores are set to let shoppers keep unwanted Christmas gifts AND give them a refund as supply chain shortage sees cost of processing returns rocket by 59% – but they’ll also keep tabs on people suspected of gaming system
- According to returns processor Optoro, returning a $50 item costs an average of $33, up 59 percent from 2020, when the same return would cost just $13.53
- Optoro’s CEO Tobin Moore claims supply chain issues and worker shortages are to blame
- Given all of the issues and rise in prices, retailers are expected to pass on the cost of returns in higher prices
- But sometimes, retailers like Amazon will just tell returners to keep the goods they don’t want and still provide a refund because the return costs too much
Processing unwanted Christmas returns has become so expensive for online retailers they’re increasingly likely to let customers keep the item and offer a refund too.
According to returns processor Optoro, returning a $50 item costs an average of $33, up 59 percent from 2020, when it cost around $13.53 to do so.
That has led to an increase in the number of retailers telling shoppers’ to keep an unwanted gift, rather than return it, because the processing cost wipes out any profit they’ll have made.
Optoro’s CEO Tobin Moore claims supply chain issues and worker shortages are to blame for the rocketing prices of handling returns.
According to CBRE supply chain, about three in 10 online purchases get returned.
Many big retailers already analyze shoppers they suspect of gaming the system by making too many returns, or buying goods in the hopes of getting to keep them and receive a refund. And attempting to exploit the strained system could result in people being banned from shopping with certain retailers, experts have warned.
The cost of returning a $50 item to a retailer could come in as high as $33, a stunning 59 percent increase from 2020, when the average cost was just over $13.50
A USPS van is pictured laden with Black Friday purchases in NYC on December 3. People who try to game the new system of no returns and a refund are being monitored by retailers, experts have warned
‘The consumer pays the price of a free return,’ Columbia Business School retail studies professor Mark Cohen told Today. Ultimately, retailers will increase the price of their products to make up for the shortfall caused by returns, further hitting shoppers who’ve already seen their finances depleted by inflation.
But sometimes, retailers like Amazon will just tell returners to keep the goods they don’t want and still provide a refund because the return costs too much.
Moore says, however, that this is not an excuse to try and game the returns system for more free items.
‘There’s tracking involved that will determine whether or not consumers are taking advantage of the system,’ adds Moore.
Online retailers are typically working round the clock to make sure they can get the returned products back in stock so they don’t have to mark down prices.
Online retailers like Amazon were up 11 percent from last year in sales during the holiday season
‘The faster you can get a good back to stock, the more you can avoid markdowns,’ Moore said.
However, those items returned to online retailers are often just gotten rid of or donated or sold through a different avenue.
It was a good holiday season for retailers, regardless.
Between November 1 and December 24, they recorded a sales increase of 8.5 percent from 2020, according to Mastercard SpendingPulseTM.
Online retailers benefitted especially, up 11 percent from last year in sales. In-person shopping also rose by more than eight percent, spelling good news for businesses hit hard by COVID and the burgeoning popularity of online shopping.