Over 200 small retailers will fail as half of UK shoppers demand stores foot the bill for returns
As UK consumers learn to exploit new consumer rights introduced over the past five years, a survey by leading courier price site ParcelHero reveals at least 200 e-commerce businesses don’t expect to survive the massive growth in returns over the Christmas period.
Returns reached 47% of all ParcelHero shipments in the first days of the New Year and traders say that they were pressured into paying the cost of returns for unwanted items – or risk losing their all-important five-star ratings.
And that’s just the tip of the returns iceberg; the situation is set to get much worse over the coming year.
ParcelHero’s head of consumer research, David Jinks MILT, said:
“Smaller online businesses have been left reeling as half of all shoppers demanded they pay for all returns, not just faulty goods. As 8% of shoppers admit to returning several items a month, small retailers say they are losing money on all returned items.
“Our new report, Retailers Reach the Point of No Returns, based on the results of our exclusive interviews with a thousand retailers of all sizes and many hundreds of consumers, found a huge gulf between the expectations of shoppers and the reality for smaller retailers. Web stores operating on wafer-thin margins say they are unable to cover the loss caused by returned items. But shoppers used to the flexible return policies of e-commerce giants such as Amazon and ASOS are 80% more likely to shop at a store with a free returns policy, with more than half of them saying it would make or break the purchase.”
The 14-day ‘cooling off’ period for online purchases under the Consumer Contracts Regulations is being exploited, say many small businesses. Traders claim they had Christmas candle holders returned as unwanted, with wax still on them, and skis and skiing jackets returned, obviously used, just after the Christmas break. There’s little doubt customers are exercising their returns rights, with over 10% of customers surveyed admitting they buy clothes in several sizes and expect stores to pay the return for the ones that don’t fit.
The problem is not only growing for online retailers. High street stores are also taking a hit.
As one fashion store department manager told ParcelHero:
“Sales teams for particular departments make commission if they make 12%… However, returns come out of this total – including returned items from our online store. Internet returns are horrible!… Some days we only have click and collect customers. I believe that any high street stores that do not close down will just be for customer service and collections; kind of like Argos.”
With some small traders forced into even videoing the packaging of items to prove what was sent.
“Our fascinating interviews with retailers of all sizes reveal the huge problems facing retailers coping with fast-changing consumer attitudes, as this ticking time bomb finally explodes.”
You can read the full report on the impact of returns in ParcelHero’s survey report, ‘Retailers Reach the Point of No Returns’ at https://www.parcelhero.com/blog/marketplace/retail-returns-got-hand