Return to Sender

By: Kevin Behan
Published: June 20th, 2024

A recent report by the International Council of Shopping Centers (ICSC) shows the return rate for items purchased online is three times higher than for in-store purchases.

Data indicated the average return rate for online transactions was 15.2%, compared to a 5% return rate for brick-and-mortar locations. The report equated for every $100 spent online, an average of $15 is returned, while only $5 out of $100 spent in stores is returned.

ICSC’s Consumer Returns Survey polled a demographically representative U.S. sample of 1,012 consumers about their motivations for returning items purchased online compared to in-store. The company conducted a returns analysis on $848.1 billion of in-store and online spending in 2022 across 69 retailers and 2,103 stores.

The most common reasons for returning online purchases are damaged items (52%), items do not fit properly (50%), items not as expected (42%), and the wrong item was sent (37%). The report found the online return rate was higher than in-store returns across all categories of retailers studied. The largest gap was for discount department stores, where customers returned 6.2% of items bought in stores, compared to 33.2% of items purchased online.

“We have known for some time the value of brick-and-mortar to a retailer’s strategy,” said ICSC President & CEO, Tom McGee. “Our latest findings further prove this by showing that the return rate for in-store purchases is three times less than the return rate for online purchases. Additionally, consumers are becoming more mindful of changing return policies that result in fees and shortened return windows.”

For apparel retailers, consumers returned 22% of products they bought online, more than three times that of in-store purchased items (6.2%). ICSC’s survey found that 87% of consumers who overbuy online do so with apparel to try things on at home and return what they don’t want.

The study also revealed some details about consumer behavior and how return policies impact their purchasing decisions. Other highlights from ICSC's Consumer Returns survey include:

• 82% of respondents said that when shopping online, return policies influence whether they decide to purchase from a retailer.
• To combat the growing challenge and costs of returns, retailers are changing their online return policies, but they must be mindful of the impact on consumer behavior. If retailers charged a fee to ship back purchases made online, nearly three-fourths (71%) of respondents said they’d likely stop shopping online from that company altogether, while 6 in 10 said they’d likely stop shopping online with retailers that shortened the free return window.
• “Keep it” policies may be becoming more prevalent as retailers attempt to mitigate the additional cost of shipping back returned items. Sixty percent of respondents said they’ve been given a full refund and just told to keep goods they had purchased online.
• While stricter online return policies might drive consumers away from shopping online, it can drive shoppers to stores. Seventy-nine percent of consumers would be more inclined to visit a retailer’s store to make a return if they were charged for returning items purchased online, while 77% also said that they would visit a retailer’s store to make a purchase if they were charged for returning items online.

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