Online shopping returns hit retailers’ profit margins

Consumer demand for free and easy returns when shopping online is putting pressure on retailers and hitting their profits.

The findings from Barclaycard indicate that over the last 12 months, the increasing rate of returns has presented a number of challenges for online retailers, with three in ten claiming that managing the returns process has an impact on their profit margin. This comes as online shopping continues to grow in popularity, with spending in digital channels rising 14.1% year-on-year in 2015, compared to just 1.1% in-store.

The speed and convenience with which purchases can be made and returned has led to the emergence of the ‘serial returner’, someone who regularly orders more than they need with no intention of keeping every item. Three in ten shoppers deliberately over-purchase and subsequently return unwanted items, with one in five admitting to ordering multiple versions of the same item to make up their mind at home – safe in the knowledge they can choose from the ever-growing number of ways to quickly and easily send items back, such as hourly courier services and local drop-off points.

Shoppers have also come to expect good value regardless of whether they’re making a purchase or a return. Around 58% say a retailer’s returns policy impacts their decision to make a purchase online, and almost half of these would not order an item if they had to fund the cost of sending it back from their own pocket.