By David Jinks M.I.L.T, head of consumer research at ParcelHero
“Zara’s announcement that it will start charging shoppers a shipping fee for returning products could mark the beginning of the end for free online returns.
Returns have been costing UK retailers around £60 billion a year with one in three fashion items purchased online now sent back. Now, as the Covid online shopping bubble begins to deflate, free returns are no longer sustainable for retailers.
“In June 2018, Next announced it would start charging for return items picked up from home or a drop-off point. That followed an earlier study from ParcelHero revealing that many fashion stores reported an astonishing 60 per cent of items ordered online over Christmas 2017 had been returned. Analysts thought many more retailers would follow Next’s example, but the pandemic temporarily halted plans. Non-essential stores were not open during lockdowns to receive returns, and online retailers made profits large enough to absorb these costs.
“Now that the covid online sales bubble is deflating, free returns are again becoming too much for retailers to absorb. Ironically, just as online retailers are seeing profits fall, ‘wardrobing’ is rising again now that people have resumed socialising.
“Zara has finally followed in Next’s footsteps and decided it will also no longer be a fashion victim when it comes to covering the entire cost of online returns. Most online retailers admit the cost of free returns gobbles at least 13 per cent of their annual profits.
“Zara, like Next, won’t charge customers who return things to a physical store, but will charge for the use of pick-up points. Zara will charge customers £1.95 while Next, which currently charges £2, is raising its fee to £2.50 after 21 June.
“Other stores have also started charging for returns. For example, Uniqlo introduced return charges in March 2021. Its returns, via Evri ParcelShop, cost £2.95.
“‘Wardrobing’ is a headache for the likes of Zara, but it’s a make-or-break issue for smaller, specialist online marketplace traders. They are frequently forced to take back obviously used items rather than lose their five-star rankings or consumer trust scores and, furthermore, can’t afford to take such cases to court. They will be very relieved to see major retailers finally taking a stand.
“Which major brand will be next in following Zara’s lead? In December 2021, Boohoo said its profits wouldn’t be as high as previously thought, due in part to “exceptionally high” returns. Logically, it may become one of the next retailers to introduce a returns charge.
For more information on the full impact of returns on retailers large and small, click here to read ParcelHero’s Retailers Reach the Point of No Returns report.