What Percentage Of Items Bought Online Get Returned?

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comScore expects eCommerce sales to rise 17%, reaching $43.4 billion this holiday season, compared with last year. J.P. Morgan analysts, which hosted a call with the data firm Friday, estimate 12% of eCommerce sales coming from mobile, although comScore puts it at 13% for the holiday season.

In a report published Friday, J.P. Morgan Analyst Doug Anmuth estimates between 40% and 60% year-on-year growth for U.S. retail-related smartphone use, outpacing 37% year-on-year adoption rates. Consumers continue to become more comfortable with making online purchases. Many use apps when buying from pure Internet companies. In fact, mobile apps at 84% -- versus the mobile Web at 16% -- for pure Internet companies like Amazon and eBay continue to see much greater adoption rates.

But there is a long list of issues related to rising online purchases. On Sunday at Bloomingdales a customer service rep at the counter made a phone call to determine whether he could accept a return for a brand new purse, not really my style, purchased online that arrived via FedEx on my doorstep earlier in the day. What I didn't understand is why a customer service rep would need to make a phone call to determine whether or not he could take a return from an online purchase.

eCommerce adoption rates continue to climb, but what percentage of items bought online get returned for credit, cash, gift cards, merchandise or other? As more consumers become comfortable, do retailers run the risk of smaller profit margins and lower return on investments, or will companies simply need better technology to automate transactions and returns? Will returns from online purchases eventually drive up the price of goods and services? 

For every online transaction, how much does it cost a retailer if the product is returned or exchanged, and what type of cushion will retailers need in the future? For those who can share insights, feel free to chime in. While I expect numbers reflecting a high rate of returns when the National Retail Federation releases a study on the topic this week, I'm not expecting the findings will address many of my concerns, such as more accurate product descriptions and better technology automation that ties together search and on-site targeting. (No word from the NRF. I'm at least a day early on my request.)

Do retail marketers take into consideration paid search and other marketing campaigns when it comes to reducing online purchase returns? The 2012 U.S. Online Retail Holiday Shopping Report from Kenshoo tell us Return on Ad Spend (ROAS) from paid search rose 8% this year compared with last, and conversion rates increased 10%, as advertisers improved campaign quality. Low average cost per click (CPC) and high Average Order Values (AOV) combined to drive ROAS on Thanksgiving above $10, 72% higher than the holiday season average of $5.99. 

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5 comments on "What Percentage Of Items Bought Online Get Returned?".

1. Shelly Kramer from V3 Integrated Marketing
   

   commented on: December 10, 2012 at 5:59 p.m.
   I don't have any answers, Laurie, but I know I order online all the time, and return a lot. In recent weeks while shopping for some new boots, that resulted in $800 in orders, all of which were returned (for free) and another $600 or soin clothing that didn't fit right or that I just didn't like as much IRL as online. I'm a busy person, online all day every day. But i'm also a discriminating shopper. I'm all for hitting the "buy" button, especially when free shipping and/or free returns is involved (but that's not a determiner for me - I'll buy even without that). But I'm not keeping something I don't love, especially the more expensive it is. I imagine, based on the handbag you returned the other day, you're the same. Again, I don't have the answers, but as someone deeply immersed in the ecom space for and with clients, I'm watching this with great interest! Thanks for a stellar post. As usual.
2. Andre Szykier from maps capital management
   

   commented on: December 10, 2012 at 7:57 p.m.
   Clothing and accessories are a real problem due to the lack of mass customization on style and fit. These retailers have to have free returns to survive and some do well like Zappos while others like Gap have problems. I suspect that electronics has low returns unless the goods are damaged or not as ordered.
3. Miroslav Varga from Escape
   

   commented on: December 11, 2012 at 1:56 a.m.
   Hi Laurie, we have several dozen online/offline partners. The return rate in brick and mortar shops is about 25% higher then from on-line purchases. We concluded this is because the showroom effect. The highest return rate is for mobile phones :) Miroslav
4. Laurie Sullivan from lauriesullivan
   

   commented on: December 11, 2012 at 9:22 a.m.
   Thanks Miroslav, Andre, and Shelly for sharing your thoughts. Earlier this month the NRF released numbers on return fraud, but I'm looking for numbers on returns from online purchases. "Retailers will lose an estimated $8.9 billion to return fraud this year, and $2.9 billion during the holiday season alone. Overall, retailers estimate 4.6 percent of holiday returns are fraudulent."
5. Bert Shlensky from stretchandcover
   

   commented on: December 12, 2012 at 3:39 p.m.
   the answr is it depends . places like zappos pay return freight so customers buy a lot and then return a percentage . in contrast where the consumer pays return freight on a known items returns are lower . Fit and color issues will always increase returns . bigger items return less because of the return freight .

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