2 days ago
In-Store Returns for Online Orders Are Crushing Retailers, Survey Shows
While online shopping has been a boon to many businesses, in-store returns are proving a crushing burden for retailers.
In fact, 43 percent say handling returns stemming from e-commerce purchases is one of their foremost challenges, according to a recent survey from Retail Systems Research (RSR) and retail technology provider Jumpmind. Those same retailers also said increases in return volumes has created new expenses due to employee workload and processing costs.
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At the same time, retailers aren't capitalizing on what has been characterized as an upside of in-store returns: the chance to entice shoppers into another sale. The added touchpoint isn't actually providing them with much sales lift, the study showed, with just 17 percent of consumers spending more money during their returns visit.
That's a far grimmer estimate than retailers anticipated; 72 percent of those surveyed believe that in-person returns create new opportunities for in-store sales. While 40 percent do look for a similar item to exchange (perhaps in a different size or color), a full 43 percent simply return their purchase and walk out.
The study, which surveyed retail and store managers between December 2024 and January 2025, underscored the idea that while e-commerce has given shoppers convenience and near-unlimited product selection, that access has led to an unintended consequence for retailers—namely, a deluge of returns. The average return rate for online buys is three times higher than the rate for in-store purchases given practices like 'bracketing,' or buying the same product in different sizes with the intent to return what doesn't fit.
The practice might be beneficial for shoppers, but it's costing retailers money. According to the study's research, average return costs for retailers amount to between 15 and 30 percent of the original purchase price—a total impact of $550 billion per year.
Notably, most retailers urge online shoppers to return unwanted purchases in stores to avoid the cost of shipping and handling. But more than one in every 5 retailers also said their stores aren't equipped for advanced customer service functions, from online returns to online order pickups, despite 41 percent saying they know omnichannel fulfillment and returns require new tools, roles and workflows.
A sour experience can leave a bad taste in a consumer's mouth—and that impression can be lasting. Ease of returns is often cited by shoppers as a top reason that they choose to shop at certain stores, and those that have modern processes in place for quick, seamless transactions tend to win out.
'Those retailers whose returns processes have not been overhauled since their (likely) creation during the pandemic are particularly challenged, as the processes they cobbled together in a hurry are not fit for today's scale of returns,' Steve Rowen, managing partner at RSR, said in a statement. In fact, 65 percent of retailers reported that their current technology can't support 'the future of shopping.'
'The ability to accept a return is one thing; the ability to profitably handle that merchandise is far more complex,' Rowen said.
Lauren Cevallos, head of strategy and customer service at Jumpmind, noted that retailers are leaving money on the table by not optimizing in-store returns.
'Instead, the cost and complexity of handling online returns is weighing down retailers' store efficiency and profitability,' she explained. 'Many are using disparate and legacy systems that make the process more challenging—for both store associates and customers.'
Still, some 80 percent of sales still take place in retail stores, so it's crucial that retailers revamp and enhance their returns processes. As it stands, just 30 percent of retailers with POS systems older than five years said they feel confident they're delivering an innovated and differentiated experience, compared with 73 percent of those that have upgraded their systems in the past two years.
'Unfortunately, shoppers don't have much empathy for tech that isn't up to par,' analysts wrote. 'Retailers must be equipped to process returns efficiently and cost effectively. And those who treat returns as a transactional afterthought risk rising costs and lower customer satisfaction.'
