Retailers Face Margin Pressure as 39% of Consumers Return Monthly, Yet Optimized Returns Could Unlock New Growth Opportunities
Narvar, the leading post-purchase intelligence platform, unveiled its 8th Annual State of Returns Report, offering key insights into the evolving returns landscape. As e-commerce continues to dominate consumer shopping behavior, this year’s report sheds light on the increasing complexity and cost of managing returns, as well as the innovative strategies that can turn this challenge into an opportunity for growth.
With e-commerce return rates rising, the report highlights that nearly 39% of consumers now return items purchased online at least once a month. In 2023 alone, returned merchandise in the U.S. reached an astonishing $744 billion (NRF). While returns have traditionally been seen as a cost center, Narvar’s latest research emphasizes the potential for savvy retailers to optimize their returns process, turning it into a revenue-driving engine.
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Key Findings from the 2024 Report Include:
- Consumer Behavior and Preferences:Â The report finds that 46% of consumers purchase items online once a week or more, and 87% do at least half of their shopping online.
- The Rise of Return Fraud: Return fraud is becoming an increasingly severe issue, with 57% of shoppers admitting to engaging in fraudulent returns at least once. This year, return fraud incidents rose 16 percentage points to 52%, making it a critical area for retailers to address.
- Returns as a Growth Opportunity:Â While returns are often viewed as a financial drain, the report reveals that retailers who invest in optimizing their returns process can unlock significant growth opportunities. By improving the returns experience, retailers can enhance customer satisfaction, drive repeat purchases, and increase customer lifetime value. Narvar’s data suggests that an optimized returns process can even convert up to 60% of returns into exchanges or store credit, directly contributing to revenue retention.
Amit Sharma, CEO of Narvar, commented on the findings: “The returns process is often overlooked, but it holds incredible potential for driving customer loyalty and lifetime value. As our research shows, retailers who invest in optimizing their returns experience can transform this traditionally costly and burdensome process into a significant growth opportunity.”
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Turning Returns Into Revenue: A Strategic Approach
Returns have long been viewed as a necessary evil in the retail world—an inevitable cost of doing business in an increasingly digital marketplace. But Narvar’s latest findings challenge this thinking, presenting a case for how savvy retailers can turn the returns process into a revenue-driving opportunity.
For instance, Narvar’s data shows that 60% of consumers are open to exchanges or store credit instead of full refunds if the process is quick and convenient. By focusing on seamless exchange options and incentivizing store credits, retailers can retain more revenue from returns while simultaneously enhancing customer loyalty.
Furthermore, the report highlights the importance of tailoring the returns experience to different customer segments. For example, younger consumers (ages 18-29) are more likely to favor instant refunds or exchanges, while older shoppers prioritize convenient and low cost return methods. By understanding these preferences, retailers can craft personalized return experiences that not only meet customer expectations but also encourage repeat purchases and longer-term loyalty.
As e-commerce continues to grow, so too will the volume of returns. Retailers that proactively address this challenge by optimizing their returns strategy will be better positioned to protect their margins and capitalize on new growth opportunities in the years ahead.
