Just-keep-it refunds to cost companies $4.4 billion during record-high holiday returns

The huge growth in ecommerce over the pandemic has led to a massive increase in the number of just-keep-it refunds that could cost retailers up to $4.4 billion.

The practise involves giving consumers a refund for faulty or inadequate products but letting them keep the item in question instead of returning it to the retailer.

Ecommerce giants including Walmart, Target and Amazon have all ramped up this offering in a bid to remove the hassle of processing returns during a period of global supply chain crisis.

Holiday ecommerce returns are expected to rise to more 10% over the past 12 months, reaching a figure as high as $114 billion, according to data from auction service B-Stock.

UPS estimates returns will bring a record-high 60 million parcels back to sellers this returns season.

READ MORE: Clothing returns rates surge as omicron impacts festive season

AlixPartners believes that the value of all refunds that will not or haven’t been returned to retailers will reach as much as $4.4 billion across the retail sector.

To exacerbate the situation for sellers, The Wall Street Journey reported that longer return periods of up to 90 days could potentially push many seasonal items out of their viable selling return windows.

Normally, an Amazon order takes only one shipping label to get it from its distribution centre to a consumer’s doorstep, however it can often take three separate shipments to get the item back to fulfilment centre if it is being returned.

As part of the return, items must stop at a store or warehouse where an employee must inspect the item to determine whether they are in a condition to be resold.

Once the cost of shipping, storing and inspecting are totalled, it often makes sense for a seller to offer a no-return refund.

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