30-Minute Sifted Group Demo Watch Now

Sifted logo

3 Things You Need to Know About Return Shipping

by Sifted Team

May 1, 2020

5 min read

Keeping your shipping operations in top shape is tough enough, but managing return shipping is an entirely different beast. About 30% of eCommerce purchases are returned, taking a big bite out of your bottom line if you don’t manage the process properly.

Keep these issues in mind as you develop or manage your return policies and operations:

 

1. Return Shipping Costs More Than Outbound Shipping.

The increasing ease of online shopping has created sky-high consumer expectations for how the entire shopping journey should go. According to ReturnMagic, 80% of shoppers expect to be able to return items for free, but only 25% of retailers offer free returns. Additionally, 69% of shoppers in a survey said having to pay for return shipping would keep them from buying from a retailer.

Of course, shipping is far from free for you as the retailer, and there are many factors that cause the cost of return shipping to creep up:

  • Surcharges for a printed or emailed return label — the cost varies based on the level of service provided, but can range from $1.05 to $8.20. If you automatically provide return shipping labels in your shipments, consider providing them only if needed to cut down on unnecessary costs for unused labels.
  • Fees for picking up the package from the customer
  • Ground residential rates, which many shippers have not optimized a discount for in their contracts.
  • The cost to re-ship the correct item if the customer requests an exchange.

 

2. Returns Clog the Shipping Network.

Carriers put an emphasis on the timeliness of outgoing packages and returns get the short end of the stick. Depending on the item, its cost, and whether it will be able to be restocked, some retailers even tell consumers to keep or donate the item rather than spend the money to get it back.

 

3. There Is No Service Guarantee on Return Packages.

Many of our clients are surprised to hear about this. Because return shipments aren’t a priority for carriers, if you have a time-sensitive package that is being returned to you, your carrier won’t refund your money if it arrives late.

FBA vs FBM

Get Your Reverse Logistics Under Control

So What Can You Do To Keep Return Shipping Costs From Eating Into Your Profits?

If you do choose to offer free return shipping, factor the cost into your Cost of Goods Sold (COGS). Thanks to an economic principle called the “the pain of paying,” shoppers are willing to pay more for an item as long as they don’t have to pay for shipping and the same will hold true for returns.

If you determine that you can’t offer free return shipping, be crystal clear with your customers that a shipping fee will apply to their return. Shoppers appreciate transparency, and it might help stop them from purchasing items with the intention of returning them, saving you restocking or disposal costs.

Returns are part of any eCommerce business, but not tightly managing the process is a costly mistake. Understanding the data surrounding both your outbound and inbound shipping is the first step to making the right decisions on how to handle return shipping.

Want to know about some other ways you might be paying too much for shipping? Surcharges have a huge impact on your shipping spend, but there are ways to reduce the cost. Check out our newest eBook, 5 Budget-Busting Surcharges & How to Lower Them.

Topics: Customer Experience, Return Shipping, Reverse Logistics, Service Guarantees, Surcharges
Topics

Check out related resources at Sifted.

Amazon Shipping: A FedEx and UPS Challenger

Amazon Shipping: A FedEx and UPS Challenger

In an era full of fast-paced change and challenges in parcel shipping, Amazon is finally throwing their hat into ...
Read More
9/25/23 Parcel News Update

9/25/23 Parcel News Update

1. USPS Won’t Impose Peak Season Surcharges This Year The U.S. Postal Service has announced they won’t implement ...
Read More
9/18/23 Parcel News Update

9/18/23 Parcel News Update

1. Details Emerge on Amazon Shipping At their annual conference for sellers, Amazon execs shed light on a few ...
Read More
USPS Ground Advantage: What You Need to Know

USPS Ground Advantage: What You Need to Know

The United States Postal Service (USPS) has implemented a major change to their service offerings. With the aim of ...
Read More
What’s Next for Shippers: 2024 FedEx GRI Analysis

What’s Next for Shippers: 2024 FedEx GRI Analysis

It’s General Rate Increase (GRI) season once again. In true duopoly fashion, FedEx and UPS have announced the same ...
Read More
2023 Peak Season/Demand Surcharge Guide [FedEx & UPS]

2023 Peak Season/Demand Surcharge Guide [FedEx & UPS]

Please note: This article focuses on Ground and Express charges. For a full breakdown of international and other ...
Read More
9/11/23 Parcel News Update

9/11/23 Parcel News Update

1. FedEx Releases 2024 GRI After previewing a 5.9% GRI, FedEx released the full details of their 2024 rate ...
Read More
9/5/23 Parcel News Update

9/5/23 Parcel News Update

1. FedEx Announces Peak Season “Demand” Surcharges FedEx has announced their Peak Season Surcharges for 2023, and ...
Read More
How the UPS and Teamsters Agreement Will Impact Shippers

How the UPS and Teamsters Agreement Will Impact Shippers

Public criticisms, shifting verbal deadlines, practice pickets… and now, a historic contract. UPS and the ...
Read More
Sifted at Parcel Forum 2023

Sifted at Parcel Forum 2023

In September, some of the supply chain’s brightest minds will gather in Nashville at PARCEL Forum 2023, the ...
Read More
8/28/23 Parcel News Update

8/28/23 Parcel News Update

1. UPS Teamsters Ratify National Master Agreement Rank-and-file UPS workers represented by the Teamsters union ...
Read More
8/21/23 Parcel News Update

8/21/23 Parcel News Update

1. Amazon launching shipping service that offers pickups, no residential delivery fee Amazon is launching Amazon ...
Read More

Are you an FBM (fulfillment by merchant) Amazon seller?

Check out our Marketplace Intelligence solutions to protect your bottom line.

Shipping Insights & Alerts
Get updates and track the things impacting your business most

Decision Support
See how supply chain adjustments pay off before you pay out

Carrier Management
Streamline how you manage your carrier operations and contracts

Business Automation
Let software do what it does better than people can

Seller Insights
Measure and monitor with confidence.

Sales Visualization
Shed new light on your sales data.

Fee Analyzer
Understand the impact of ever-changing FBA fees.

FBA Audit & Recovery
Secure money you’re owed from Amazon.

Blog
Discover news, tips, and industry best practices

DIM Weight Calculator
See how DIM is impacting you

Podcast
Hear from industry experts on LeaderShipping

Customer Stories
Learn how other brands use
Logistics Intelligence

Carbon Calculator
Calculate your CO2 Emissions

Thought Leaders
Meet the people behind the technology

Guides
Download free reports and expert how-tos

Demo
Get a personalized tour of our software

Logistics Intelligence
For parcel shippers

Marketplace Intelligence
For Amazon FBA sellers

Let's get you to the right place!

SIFTED DASHBOARDS
For parcel shippers

AMAZON Marketplace Intelligence

Not sure if you have an account? Email [email protected].