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Increasing demand for free returns could lead to smaller retailers failing

An increasing expectation from customers for free returns could lead to more than 200 smaller ecommerce businesses failing, according to new research from ParcelHero.

The company’s research shows that the cost of returns – which many smaller retailers feel pressured into paying to maintain customer service ratings – could cripple smaller providers.

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. The situation is expected to get worse this year, says ParcelHero.

“Smaller online businesses have been left reeling as half of all shoppers demanded they pay for all returns, not just faulty goods,” said ParcelHero’s Head of Consumer Research, David Jinks.

The conclusions are based on ParcelHero’s new report Retailers Reach the Point of No Returns, which showed that web stores operating on thin margins are unable to cover the loss caused by returned items, yet more than half of shoppers said a free returns policy, would ‘make or break the purchase.’

The 14-day ‘cooling off’ period for online purchases under the Consumer Contracts Regulations is also 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.

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