This year’s holiday shopping is predicted to hit all-time highs. However, an increasing proportion of such purchases will be returned.
According to a recent analysis by the National Retail Federation and return management business Happy Returns, returns are predicted to account for 17% of all merchandise sales in 2024, or $890 billion in returned products. This is an increase from the return rate of almost 15% of all retail purchases in the United States in 2023, which amounted to $743 billion in returned products.
The NRF also discovered that while returns occur all year round, they are far more common over the holidays. Retailers anticipate an average return rate for the holidays that is 17% higher than the yearly figure as shopping peaks in the coming weeks.
“The problem is not going to abate any time soon,” stated Amena Ali, CEO of Optoro, a firm that provides returns solutions. “Ideally, there is a world in which you can reduce the percent of returns.”
Why returns are a major issue
Customers were more used to their purchasing and return practices as a result of the pandemic’s impact on internet shopping, and more people started placing orders for items they never planned to retain.
According to Happy Returns, over two-thirds of buyers now purchase many sizes or colors, some of which they subsequently return, a behavior known as “bracketing.”
Additionally, according to a different Optoro survey, 69% of consumers acknowledge “wardrobing,” which is the practice of purchasing an item for a certain occasion and then returning it later. That is a 39% rise over 2023.
According to Optoro, 46% of customers reported returning items often each month, a 29% increase from the previous year, mostly as a result of these kinds of actions. The cost of all that back and forth is high.
In a statement, Happy Returns co-founder and CEO David Sobie stated, “Retailers need to rethink reverse logistics as behaviors like bracketing and rising return rates are putting strain on traditional systems.”
How do your returns turn out?
According to Optoro, the average cost for merchants to process a return is 30% of the item’s original price. Returns, however, affect more than simply the bottom line of merchants.
Spencer Kieboom, the founder and CEO of the return management business Pollen Returns, says that returns frequently do not make it back into the shelf, which also presents problems for shops trying to improve sustainability.
Even more carbon emissions are produced when things are returned to be repackaged, restocked, and resold, often abroad, provided that they can be reintroduced into the market.
According to the U.S. Environmental Protection Agency, in 2018, just 54% of all packaging was recycled, and in certain instances, returned items are shipped directly to landfills.
According to Optoro, returns generated 8.4 billion pounds of landfill garbage in 2023.
According to Rachel Delacour, co-founder and CEO of Sweep, a sustainability data management company, it poses a significant issue for retailers in terms of both the environmental effect of handling those returns and the lost income. “Being sustainable is ultimately a business strategy.”
As a result, businesses are making every effort to limit returns.
According to another Happy Returns research, 81% of U.S. merchants implemented tougher return policies in 2023, such as reducing the return window and imposing a return or restocking charge.
Retailers stated that enhancing the returns experience was a top priority for 2025, even if restocking and shipping costs could assist reduce the quantity of product that is returned.
These days, 33% of retailers—including Amazon and Target—let consumers “keep it,” giving them a refund without requiring them to return the item.
To keep products in circulation, some are attempting repurchase schemes. Patagonia started their online Worn Wear reselling business in 2017. Since then, several companies have followed suit, such as Levi Strauss & Co., J. Crew, Neiman Marcus, and Coach.
Some Ikea stores even purchase back used Ikea furniture so that it may be sold again. Amazon Renewed and Walmart Restored are also available.
Returns are sold by other merchants to companies like Play It Again Sports, Plato’s Closet, and Once Upon a Child, where they are discounted and offered for sale as used goods.”You require a comprehensive solution,” stated Ali of Optoro.
How return policies influence consumers’ purchasing behaviors
According to Sobie of Happy Returns, return policies and expectations are becoming a significant indicator of customer behavior, especially for millennials and Generation Z.
“Return policies are influencing how younger generations shop from the beginning — they are no longer just a post-purchase consideration,” Sobie stated.
According to the NRF, 67% of consumers believe a bad return experience will deter them from making another purchase from a store, and 76% of consumers say free returns are an important consideration when choosing where to spend their money.
According to a GoDaddy poll of 1,500 respondents, 77% of consumers look at the return policy before completing a purchase.
