Rise in returns threatening future of small businesses

25 February 2018 - Janet Bird

customer store returns

A rise in the rate of 'regular returners' - people who habitually buy goods and then send them back - is threatening the future of many small online retailers, research suggests.

The recently published research was conducted by delivery company ParcelHero, which found 47 percent of its own shipments were returns in the first few days of 2018.

ParcelHero interviewed over 1,000 ecommerce businesses and around 400 consumers as part of its study.

It found that half of consumers now expect retailers to cover the full cost of returning the unwanted goods. More than 80 percent of customers questioned said they look at a retailer's returns policy when considering a purchase, with more than half saying it would make or break their decision to buy.

With margins for small ecommerce retailers so tight that covering the cost of returned goods eliminates any profit on an item if it is returned, many businesses are struggling to meet customers expectations that they will cover the cost of returns, and are losing sales as a result.

ParcelHero's research suggested that Christmas returns alone could have proved the final straw for up to 200 small online retailers.

Some businesses interviewed for the study said they experienced return rates as high as 60 percent over the festive season. Most felt they had no choice but to cover the cost of these returns - despite the fact online orders cost retailers £3 more to process than physical sales - rather than risk receiving negative customer reviews.

ParcelHero said whether they were selling online or through a traditional bricks and mortar shop, it was important for small retailers to know what they do and don't have to do when it came to accepting returned goods.

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