01.15.24
Despite the vast majority (89%) of retailers having changed their returns policies in the past 12 months to make them more expensive for consumers, or otherwise tightening the restrictions around returns, more than half (59%) experienced an increase in the rate of returns over that same period. And even retail product categories that traditionally haven’t experienced high return rates for in-store purchases are now seeing increased return rates online—including beauty—according to new survey data from digital supply chain company Blue Yonder.
Blue Yonder's survey found significant and somewhat significant return rate increases in cosmetics (73%).
In the survey, 63% of retailers said they face significant challenges with the management of returns as customers increasingly turn to online shopping options.
Overall, only 13% of retailers reported a decline in returns over that same 12-month period, according to Blue Yonder.
“These findings indicate that while retailers have tightened their policies, consumer returns are still increasing,” said Shannon Wu-Lebron, corporate vice president, retail industry strategy, Blue Yonder. “This proves that putting the onus on consumers is not necessarily the solution to control returns. Instead, retailers should be looking at technology to help them find better ways to manage the returns and reverse logistics process to reduce costs, improve inventory resell rates, and protect customer loyalty.”
Of the 89% of the retailers who said they had made some kind of change to their returns policy, those changes have included:
• 42% reduced the time window during which consumers can make a return
• 36% made some items non-returnable (e.g., sale items)
• 30% implemented flexible returns shipping charges or restocking fees (e.g., restocking fee/shipping charge varies by the reason for the return)
• 24% increased their existing returns shipping fees
• 23% implemented for the first time a restocking fee
• 17% increased an existing restocking fee
Retailers were surveyed on the cost of returns as a percentage of the product’s original value, with responses ranging from 5-10% (32%), 11-15% (29%), 16-20% (24%), and +21% (14%).
Product categories reporting percentages higher than 21% included cosmetics, according to the data from Blue Yonder.
Less than half (44%) of retailers always offer consumers marketing or promotional offers as part of the returns process, and another 16% sometimes offer marketing or promotional offers, said Blue Yonder.
“When we conducted a consumer returns survey in early 2023, our data found that a majority (74%) of consumers always or sometimes make impulse purchasing decisions when returning items in-store,” said Wu-Lebron. “Offering consumers greater incentive to go into the store to make their returns, such as a coupon code or discount, can be a win/win approach for retailers and consumers. It also allows the retailer to put the item back into stock quicker, which was one of the KPIs retailers were looking at to measure the success of their returns policy, with 30% using time out-of-stock as a measure.”
Target's policy states: "most beauty items bought in stores or online can be returned, even if opened, within 90 days with your receipt, or up to 120 days if purchased with your Target RedCard."
At Macy’s, "new or gently used cosmetic or fragrance product purchased at Macy's that does not meet your needs will be accepted for return," according to its website,
Blue Yonder's survey found significant and somewhat significant return rate increases in cosmetics (73%).
In the survey, 63% of retailers said they face significant challenges with the management of returns as customers increasingly turn to online shopping options.
Overall, only 13% of retailers reported a decline in returns over that same 12-month period, according to Blue Yonder.
“These findings indicate that while retailers have tightened their policies, consumer returns are still increasing,” said Shannon Wu-Lebron, corporate vice president, retail industry strategy, Blue Yonder. “This proves that putting the onus on consumers is not necessarily the solution to control returns. Instead, retailers should be looking at technology to help them find better ways to manage the returns and reverse logistics process to reduce costs, improve inventory resell rates, and protect customer loyalty.”
Managing Returns at Retail
In December 2023, Blue Yonder asked 200-plus US retailers to share insights into how they are managing returns. When asked, 80% said that prioritizing improvements around the returns process was either high or very high priority, with 16% saying it was medium priority. To measure their success in returns management, retailers are looking at different KPIs, including return rate (65%), average cost of return (58%), the percentage of returns eventually resold (49%), and customer lifetime value (37%).Of the 89% of the retailers who said they had made some kind of change to their returns policy, those changes have included:
• 42% reduced the time window during which consumers can make a return
• 36% made some items non-returnable (e.g., sale items)
• 30% implemented flexible returns shipping charges or restocking fees (e.g., restocking fee/shipping charge varies by the reason for the return)
• 24% increased their existing returns shipping fees
• 23% implemented for the first time a restocking fee
• 17% increased an existing restocking fee
Returns Costs
Changes to return policies were made by some retailers to help control increasing costs and recoup a portion of the expenses via customer fees. The reverse journey of a returned order incurs a multitude of costs related to shipping and transportation, processing, restocking, and customer service. As return rates increase, these costs impact the profitability of the company since retailers incur these charges without earning revenue.Retailers were surveyed on the cost of returns as a percentage of the product’s original value, with responses ranging from 5-10% (32%), 11-15% (29%), 16-20% (24%), and +21% (14%).
Product categories reporting percentages higher than 21% included cosmetics, according to the data from Blue Yonder.
Less than half (44%) of retailers always offer consumers marketing or promotional offers as part of the returns process, and another 16% sometimes offer marketing or promotional offers, said Blue Yonder.
“When we conducted a consumer returns survey in early 2023, our data found that a majority (74%) of consumers always or sometimes make impulse purchasing decisions when returning items in-store,” said Wu-Lebron. “Offering consumers greater incentive to go into the store to make their returns, such as a coupon code or discount, can be a win/win approach for retailers and consumers. It also allows the retailer to put the item back into stock quicker, which was one of the KPIs retailers were looking at to measure the success of their returns policy, with 30% using time out-of-stock as a measure.”
Beauty Retail Return Policies
Beauty retail stores like Sephora and Ulta have their own policies regarding returning or exchanging products.Target's policy states: "most beauty items bought in stores or online can be returned, even if opened, within 90 days with your receipt, or up to 120 days if purchased with your Target RedCard."
At Macy’s, "new or gently used cosmetic or fragrance product purchased at Macy's that does not meet your needs will be accepted for return," according to its website,