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How Important Are Returns To Retail?

Generous return policies have helped to fuel a return-obsessed consumer culture in the U.S. One journalist, Bourree Lam of The Atlantic, recently explored exactly why American retailers are so forgiving when it comes to returns and the surprising upside of the practice for merchants.

As Lam points out, return policies in the U.S. weren’t always so prevalent. But, over the decades, big box retailers started to adopt the practice. Return policies really started to spread their wings with the dawn and rise of online retail, and today, big and small online retailers, in order to remain competitive, offer generous return policies, which often include the cost of shipping both ways. One analysis that The Atlantic piece shares from Granify, an online retail consultancy, showed that a favorable return policy was more important to consumers than attractive prices when it came to online purchases.

Just like everything else in retail, the impact of returns is much bigger during the holidays. The National Retail Federation, reports Lam, estimates that returns this post-holiday season will add up to some $260 billion. And according to Marketplace, of the 600 million packages delivered between Thanksgiving and Christmas, about 10 percent — or 62 million — are expected to be returned in January.

Where do all these unwanted items go? While many shoppers might believe they end up back on shelves, most are actually passed on to liquidators and resellers — or thrown out, if that’s the cheaper option for the merchant. That’s where startup Optoro comes in, as The Atlantic story explains, with a business model built around reselling returned products instead of creating waste. It doesn’t hurt that Optoro also helps retailers recoup the cost of returned items by reselling them directly online.

With “return culture” in the U.S. continuing to grow, it’s a good thing that someone has an eye on all those unwanted items and has a plan for incentivizing retailers to rethink, resell or recycle.

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