Business development · 18 January 2018

Culture of returns could kill off small ecommerce businesses in 2018

A culture of returns
Retailers claim to lose money on all returned items and cannot afford to cover postage costs

A growing returns culture could start to see small ecommerce businesses fold this year, as new research finds half of consumers expect retailers to foot the postage bill for all unwanted goods.

Retailers feel unprotected by the law and believe shoppers have begun to exploit new consumer rights introduced in the past five years.

Delivery firm ParcelHero surveyed over 1,000 retailers and more than 400 shoppers to produce an insight into consumer attitudes towards online shopping, and revealed some telling statistics.

Small business owners claimed they were being let down by the 14-day “cooling off” period for online purchases, whereby consumers are given two weeks to return an unwanted item without any questions asked whatsoever.

Legally, unless an item is faulty, the customer is obliged to foot the return postage bill. For unwanted goods, the retailer does not have to cover postage.

However, retailers are becoming increasingly concerned about new demands of online shopper, and interviews undertaken for the report suggested the law is being misused by customers.

Small business owners claimed to have received “unwanted” candle holders back covered in wax, while skis and ski jackets were returned soon after Christmas which were “obviously used”.

Returned Christmas gifts amplified the problem for retailers, with as many as £464m worth of goods sent back by customers in January. ParcelHero claimed as many as 200 small businesses could cease trading following the Christmas period through returns alone.

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With half of online shoppers believing the seller should cover the cost of unwanted items as well as faulty goods, the study confirmed that consumers have been accustomed to the flexible return policies of ecommerce heavyweights like Amazon and ASOS. 

Further, 80 per cent were more likely to shop at a store offering free returns, while over half said it would “make or break” their purchase.

Commenting on the how a culture of returns could impact on small retail businesses, David Jinks, ParcelHero’s head of consumer research, said customer attitudes were hardening.

“Smaller online businesses have been left reeling as half of all shoppers demanded they pay for all returns, not just faulty goods,” he explained.

“As eight per cent of shoppers admit to returning several items a month, small retailers say they are losing money on all returned items.’

Some retailers surveyed for the study even said they had begun to video themselves packaging orders to prove what was sent.

Jink added: “Our fascinating interviews with retailers of all sizes reveal the huge problems facing retailers coping with fast-changing consumer attitudes, as this ticking time bomb finally explodes.”

Find out the ecommerce mistakes even Amazon is guilty of making

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ABOUT THE EXPERT

Simon Caldwell is deputy editor at Business Advice. He has a BA in politics and communications from the University of Liverpool, and has previously worked as a content editor in local government and the ecommerce industry.

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