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Parcel returns cost UK retailers a hefty $76 billion per year

Parcel returns cost UK retailers a hefty $76 billion per year
Parcel returns cost UK retailers a hefty $76 billion per year

As we leave last year’s holiday shopping season in 2024’s rearview mirror, the impact of customer returns remains a harsh reality for UK retailers. According to ParcelHero’s white paper, returns cost sellers a whopping $76 billion (£60 billion) per year. 

This figure represents a significant challenge to the retail and e-commerce sectors, especially for smaller businesses that balance the delicate pressures of maintaining customer satisfaction while remaining financially viable. 

Impact of parcel returns on retailers

How does the popular ‘Takeback Tuesday’ trend affect retailers? ParcelHero’s head of consumer research, David Jinks, says approximately “$1.9 billion (£1.5 billion) of unwanted gifts and goods were returned in the first week after the Christmas and New Year break.”

“This year, we’ve seen a slight dip in returns volumes and – looking at the types of items being returned – we’re estimating around £1.41 billion ($1.8 billion) of clothing, electrical goods and toys are now winging their way back to retailers.”

ALSO READ: Preparing logistics for returned unwanted Christmas gifts

Since online orders typically cost $3.80 (£3) more to process than brick-and-mortar sales, parcel returns can easily eat into an e-commerce retailer’s profits. Those who ship internationally face an even bigger loss due to customs and shipping fees. 

In many instances, online sellers feel compelled to accept a parcel return, all in the name of maintaining a five-star rating. This brings us to the online dilemma of returns. 

The online dilemma of parcel returns

ParcelHero’s research also shows that 81% of online stores “are very concerned by increasing levels of customer returns.” Jinks says online businesses “face a no-win choice between reluctantly swallowing returns costs or risking negative online reviews.”

Some online retailers say they deal with return rates as high as 60%. Many sellers have taken recording the entire shipping process – from selecting the item to packaging and shipping it – as proof that there was no fault for the package, and to reduce the likelihood of returns. 

Apart from painstakingly recording the entire packaging and shipping process, retailers can take several steps to reduce the likelihood of parcel returns. 

How to ensure items aren’t returned

First, ensure that all online descriptions are clear of misleading information. Making an item sound like something it isn’t, is the fastest way to make a shopper’s blood boil. Specify the dimension in detail and ensure everything is stipulated clearly. 

Ensure the parcels are delivered on time and keep the lines of communication open during the shipping period. If there is a delay, inform the customer. Use reputable couriers to avoid any unpleasantness. 

Lastly, be on the lookout for serial parcel returners – those shoppers who just can’t resist purchasing a clothing item for a special event to return it after. Or those who order multiple variations of a single item to try them out and return the ones they don’t want.

ParcelHero suggests that retailers study their “data and analytics to identify repeat returns, to ensure that these customers are prevented from ordering in future.”

About the author

Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.

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