More on Returns
NRF has estimated that returns from US online sales totalled $247bn in 2023, 17.6% of total online orders. Total returns across all channels totalled $743bn, or 14.5% of all channel sales. Separating online sales from other channel sales, says that returns on other channels is 13.4% sales. That can be further divided into brick and mortar sales at 10% and online orders returned to stores of 3.4% or $124.2m. Hence online returns to all channels total $371.2bn or 21% of online orders. In other words, online orders across all categories have double the return rate of brick and mortar sales.
You also have to remember, that while goods are in the return cycle, they are unavailable to sell again, hence you lose a period of the selling season for 20% of your online sales, adding to clearance markdown challenges. Some retailers take 6 weeks to process returns.
In your merchandise or category planning processes, you need to reflect the unavailability of items in the returns loop, plus the impact on clearance costs. In estimating actual demand rather than sales, your lost sales process needs to incorporate the impact of the returns loop, as items may be out of stock in certain locations, but will be back in stock when returns are fully processed.
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Posted by Brian Hume
2nd February 2024
