E-Commerce Returns in the Post-COVID Era

Jun 08, 2022

Did you know that consumers in the United States alone had returned more than US$761bn worth of purchased goods in 2021?

Returns are central to the overall customer experience but they can also make or break your business. According to the survey by the National Retail Federation, retailers have lost a whopping $400 billion to e-commerce returns last year. It is no secret that businesses are  grappling to cope with the  influx of returns over the years, with many of them  expanding their warehouse spaces and even establishing separate departments for reverse logistics.

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The E-Commerce Return Rates study by Shopify provides an in-depth analysis of e-commerce returns logistics in the global market since the pandemic. Diving deeper, it explores the reasons for the rise of return rates as well as the trends of reverse logistics for various product categories, seasonalities and more. Read on to find out some of our key findings below:

Highest Return Rates for Automotive Products and Credit Card Users

A blended return rate of 1.6% to 19.4% was reported for online purchases in 2021, spanning almost all major product categories. Automotive retailers bear the brunt of this, with consumers returning close to  1 in every 5 purchases. Apparel retailers, home improvement and houseware brands were close behind, with  customers returning  12.2% and 11.5% of their online orders respectively. Moreover, credit card users had the highest probability of returns at 22.78%, whereas debit card users ranked the lowest at only 7.04%. 

E-Commerce Returns in the Post-Covid Era

(Image Source: Shopify)

High-Involvement Products See Higher Return Rates

According to Shopify data, items purchased in stores had a lower likelihood of returns at 9% in contrast to online purchases at 20%. Needless to say, the benefit for in-store shoppers is that they can try, touch and feel products before they purchase. As such, online fashion purchases are particularly vulnerable to returns. Bracketing, where customers buy multiple sizes to find the right fit, is commonplace, with a Narvar study finding that 58% of shoppers make this a habit. This is especially prevalent for fashion-related product categories where consumers can opt for preference-based returns (eg. size, style, fit). On the other hand, when size or emotional engagement is not as  important in making purchase decisions on products such as electricals, there is a naturally lower return rate

When To Expect the Majority of E-commerce Returns

A record-breaking holiday means a record-breaking deluge of returns for retailers. While online retailers enjoyed robust sales over the holidays last year, they also  faced increased returns in the post-peak season, with January taking the bulk of it (80.65%). Amidst the holiday splurge, Shopify has deduced that 25% of holiday shoppers buy items with the intention of returning them at a later date. 

E-Commerce Returns in the Post-Covid Era

(Image Source: Shopify)

COVID-19 Effects on E-Commerce Returns

During the onset of Covid-19, global e-commerce observed a sharp increment in sales, attracting even those who traditionally prefer to buy in-stores. On that note, this rise also had implications for online product returns. As seen in the figure below, customers now take a longer time to register a return, bumping up the average time to 8.17 days as compared to 4.53 days pre-covid. Concurrently, the window to actual drop-off time has decreased from 4.99 days to 3.62 days. According to an IMRG report, this can be attributed to various factors and the shifts in consumer behavior since the outbreak of Covid-19. Consumers are now refocusing their shopping habits and reducing unnecessary journeys which leads to an increased time to register. 

(Image Source: Shopify)

Impact of Returns on Customer Loyalty

It’s a well-worn piece of business advice, but it is indeed cheaper to retain customers than to acquire new ones. With that, a high-quality returns experience is essential in sustaining a loyal consumer base. Paypal has noted that over 75% of consumers feel returns are the most painful part of buying online. This is further corroborated by Rebound’s study which also shows that a quarter of shoppers think a delay in processing their return contributes to a negative experience. By that token, 63% of the customers surveyed expect the return window to be up to 30 days.

E-Commerce Returns in the Post-Covid Era

(Image Source: Shopify)

Streamlining Reverse Logistics for Your E-Commerce Business

Returns remain one of the biggest e-commerce  challenges affecting retailers worldwide . By carefully planning a robust returns solution for your business, strategic opportunities can be reaped such as reduced costs, increased sales, and a loyal customer base. Solving the reverse logistics problem is fundamental to growing digital sales and merchants should prioritize investments in reverse logistics whenever they have the chance. 

For more insights, check out the full article here!

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About Shopify 

Shopify is the leading global commerce platform designed for businesses of all sizes. Whether it’s online retailing, the social media marketplace, or even in-stores, Shopify provides an all-inclusive solution for all types of business. With a vision to make commerce better for everyone,Shopify empowers millions of businesses in more than 175 countries and is trusted by brands such as Allbirds, Gymshark, PepsiCo, Staples, and many more.

For more exclusive reports, insights, and interviews on the latest updates in e-commerce and logistics, follow us on LinkedIn or join our community as a member.

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