What: The challenges faced by retailers in managing online returns and the rising costs associated with them.

Why it is important: Effective management of online returns is crucial for retailers to reduce costs, protect profit margins, and enhance the shopping experience, ultimately leading to higher sales.

The introduction of free returns by Amazon in 2005 set new customer expectations and put pressure on brands and retailers to offer the same service. However, the costs of processing returns, including shipping and sorting, have continued to rise, especially during the COVID-19 pandemic. To offset these costs, some companies have started charging customers for returns.

Effective returns policies go beyond charging fees and should focus on attracting customers who make informed purchasing decisions to minimize returns. Start-ups are emerging to help brands implement strategies such as offering credits towards new items instead of full refunds and facilitating at-home pick-ups.

Brands like Monos, Ana Luisa, Mytheresa, and Revolve, which have implemented different approaches to returns management. Overall, managing returns efficiently while improving the shopping experience is crucial for retailers to protect their profit margins and generate higher sales.

Fashion’s new playbook for online returns