What: Returns are too costly for retailers, in addition to being environmentally unsustainable.

Why it is important: All IADS members are facing the same issues, and some options explored in the article could be worth being given a shot.

Retailers are doing their utmost to please their customers and giving them what they want, even if this means losing money when it comes to processing product returns. However, what is great for the customer might be harming both the environment and retailer’s bottom line, which is why the Robin Report advocates for a recalibration, especially in these times when logistics are getting more expensive.

On average in the US, the cost of shipping a product is $10, meaning that logistics are a whole in case of a return will cost $20. As a consequence (and this is already what large retailers such as Amazon are doing) for products costing less than $20, it is often better for the retailer to leave the product to the customer or to ask for local destruction rather than returning it.

In addition, return rates are rising, a mechanical consequence of the increase of e-commerce (from 18.1% in 2020 to 20.8% in 2021).

In order to mitigate the cost, The Robin Report looks into several options:

• Ask customers to receive multiple orders into one package for a discount,
• Incentivize slower shipping methods, and charge different prices for faster delivery options,
• Issue a waiting period on returns, or set price minimums to earn free shipping,
• Encourage pickups or returns in store,
• Offer free shipping only to high value customers,
• Offer free shipping or free return, but not both.

The Robin Report believes that, by being transparent to the customer and explaining what is at stake (both economically and environmentally ) this could actually become an asset for the retailer, which would then be recognized as socially and environmentally committed.

Is free shipping dead?