Retailers ready for flood of online shopping returns

NEWYORK— A huge surge in online shopping during the pandemic has been a savior for retailers, but it comes at a price.

Shoppers are expected to return twice as many items as they did during last year’s holiday period, costing companies roughly $1.1 billion, according to Narvar Inc., a software and technology company that managesonline returns for hundredsof brands.

Retailers don’t wantthereturns, but they dowant shoppers who may not feel safe going to stores to be comfortable buying things they haven’t seen or tried on in person.

People have been doing so much online buying since Marchthat carriers like UPSandFedExwere already at full capacity before the holiday shopping season. And online sales just keep soaring. From Nov. 1 though Tuesday, they spiked 32% to $171.6 billion, comparedwiththe year-ago period, according to Adobe Analytics. The massive challenges of shipping COVID-19 vaccines in the weeks and months ahead could put further pressure on the system.

That means shoppers whoreturn items may not get refunds until two weeks after they’re sent back to the store, said Sara Skirboll, shopping expert at RetailMeNot.

Many companies are offering more locations where customers can drop off returns.

Last year, Kohl’s began allowing Amazonreturns at all of its 1,000 stores — customers drop off items for free, with no box or label needed. This year, Amazon customers can also return items at 500 Whole Foods Market stores. That’s in addition to Amazon’s deal with UPS to allow drop-offs at UPS stores.

Happy Returns, a California-based startup that works with about 150 online retailers like Rothy’s and Revolve, has increased its number of drop-off locations to 2,600, from more than 700 last year. That includes 2,000 FedEx locations.

“It’s a great time to be in the returns business. Every day, there’s a record,” said David Sobie, CEO and co-founder of Happy Returns, noting he’s processed 50% more returns in December than November. Walmart, the nation’s largest retailer, announced it will pick up items shipped and sold by Walmart.com from customers’ homes for free through a new partnership with FedEx.

A growing number of retailers are asking shoppers to not even bother sending back certain rejected items.

When Dick Pirozzolo wanted to return a too-small jersey he bought for $40 on a website called Online Cycling Gear, he was pleasantly surprised with the response. The site told him to keep it, discard it, or give it to a friend or charity — and it will send him the right size for an extra $10.

“I wasfinewiththat,” said the 77-year-old cycling enthusiast from Wellesley, Massachusetts. “I did a good thing for a friend, and I got a new shirt.” The experience, he says, has given him confidence to buy more online this holiday season.

Onaverage, people return 25% of items they buy online, compared with only 8% of what they buy in stores, according to Forrester Research’s online analyst Sucharita Mulpuru. For clothing it’s even higher, about 30%.

But not all rejected items are the same and have varying levels of depreciation, experts say. After an item is sent back to the retailer, the company must assess its condition and decide whether to resell it, send it to a liquidator or the landfill. Optoro, a return logistics company, estimates the value of fashion apparel depreciates by 20% to 50% over an eightto-16-week period.