The cost of refunding-- it's not just an eBay problem.

[femmefan1946]

https://www.ecommercebytes.com/2022/04/17/returns-cost-sellers-a-whopping-21-percent-of-order-value/

Well worth reading.

The good  news about 'fast delivery' is that buyers seem to be a little more sanguine in their definition of 'fast' than we are led to believe. 

And here's the original post, not the journalist's take on it.

https://www.pitneybowes.com/us/blog/returnament-2022.html

[katzrul15]

21%?  Wow....seems high.  Are they counting shipping it both ways in that 21% calc? 

It is not free to run a business on here, for certain.  Chunk of change that Sellers get hit with.

[chapeau-noir]

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@katzrul15 wrote:

21%?  Wow....seems high.  Are they counting shipping it both ways in that 21% calc? 

It is not free to run a business on here, for certain.  Chunk of change that Sellers get hit with.

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This is industry wide and it's order value.

[dbfolks166mt]

     This does not really surprise me all that much given the constantly increasing costs of shipping which of course rolls into most business cost models. I wonder if the numbers include international returns as well or if they are just domestic. 

[luckythewinner]

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@katzrul15 wrote:

21%?  Wow....seems high.  Are they counting shipping it both ways in that 21% calc? 

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Whether two-way shipping costs were included would depend upon whether each of those 168 online retailers they surveyed refunded postage costs or not. 

I do not think this was a survey of eBay sellers. 

[norwegian_kt]

This is a terrific report. Thank you to @femmefan1946 for sharing!

I would like to hear comments on this graph from the original report, however. Am I crazy or does it seem like 21% is far too low? (I haven't tried to re-create the math yet.) I mean, 15% of retailers reported their costs of returns were 80-90%. And if you add up the guys with over-50% cost, that's 55% of the retailers. Ack.

Did I miss something?

[luckythewinner]

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@norwegian_kt wrote:

This is a terrific report. Thank you to @femmefan1946 for sharing!

I would like to hear comments on this graph from the original report, however. Am I crazy or does it seem like 21% is far too low? (I haven't tried to re-create the math yet.) I mean, 15% of retailers reported their costs of returns were 80-90%. And if you add up the guys with over-50% cost, that's 55% of the retailers. Ack.

Did I miss something?

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The graph shows the percentage of retailers, not the percentage of their retail sales. 

What may be missing is whether the survey weighted the retailers based on their share of the overall sales.

If that is the case: 

If one of the retailers with a return rate of 15% has $1 billion in sales and one of the retailers with a return rate of 95% has $1 million in sales, then the weight of the 15% would be 1000 times greater than the weight of the 95%. 

[norwegian_kt]

@femmefan1946  Here's the math that would come from the graph.

Am I on the wrong planet here? This suggests average is more like 55%.

(I don't know exact %s of each retailer, so used the means for each group.) 

[vannvo_0]

Yeah that's just ridiculous, I grappled with this not long ago... The part that got to me was the apparent carelessness of buyers, and I mean they honestly didn't seem to care, because I would ask them...

You see, if you're returning an item to me because of SNAD / Defective (or some such reason) and I receive an item that appears to be in perfect working order and is exactly the item being sold... I have questions, because as a retailer it is my job to reduce returns.

So I would ask questions because I wanted to find out what is the matter, what it is on my end that is causing these buyers to feel like they have to return the product.  I ask questions because I want to fix the problem, not make it worse... As in I'm not just a middleman dropshipper; I keep inventory so if there is something I am doing wrong then I can enact changes to make the problem go away.

And the answers I would get...

What was I supposed to do?

Ebay always told us returns are bad for buyers, they reduce confidence and buyers become discouraged and leave (that is also why ebay "punishes" sellers with high return rates, because ebay believes it affects their bottom line, which I'm sure it does, that's why we have to pay for it)...

But it's not just bad for ebay, I have to pay more shipping just to get it back and I really don't care for the "try before you buy" attitude or the buyer who feels it's my "job" to cater to them no matter how eccentric their behavior... It's that sort of entitlement which really got under my skin after a while.

Because these buyers were too lazy to actually do some homework, simply ordering something and then if it wasn't exactly what they "thought" they wanted, return it on our dime?

We instituted an RMA system.

Then we started to include COA's with every order, this helped on another front as well.

All of this cost money, we tacked this cost on to all products for sale.

The article is wrong in that regard, returns don't "cost the retailer," they cost the buyer.

Retailers who pay for returns are doing something wrong.

The buyer pays for it all.

Wow folks, and I mean to tell you we educated some folks... I drafted form letters that instructed the buyer on how to properly make an online purchase, we wrote another that outlined why returning products only served to raise prices further, then these would be sent out during the discussion process of a return, of course we never stopped happily accepting returns.

Everything always, please and thank you and dear buyer and kissy kissy, we learned this from the Chinese sellers: always be polite as can be.  Be super friendly and super sweet with the buyer, so muc that it should make you sick, that sweet.

And last but not least, as a TRS we instituted a 50% Restocking Fee for any return where a buyer used a false reason.  Mostly because I got tired of being took for a fool, being lied to, being forced to pay for return shipping because someone couldn't be bothered to look up a part number? 

At first they would call ebay and get courtesy refunds but again I was past caring, I was so frustrated I didn't care who paid for it so long it wasn't us!  And then later, either ebay stopped issuing these or the buyers stopped calling because the messages telling us about these courtesy refunds basically stopped coming with every return we thwarted.

That had the biggest impact, oh wow, ebay and buyers really listen when money gets withheld.

Yes sir folks, I mean to tell you it is the side that has to pay for it all that ends up listening (and changing their ways). So, make someone else pay for it... Our sales tanked for a while because of it but I was so far past caring, all I wanted was for the return rates to go back to a normal 3-4 out of a thousand (as in, less than one percent).  Granted not all categories are that lucky but 3-4 out of ten orders we're not putting up with.

We've been doing well for about the last 6 months or so, it was incredible, by the time it was all said and done it almost seemed like it was just a few bad apples were causing the whole headache... Because  the nonsense stopped right after we dealt with a couple of particularly argumentative buyers, we just kept sending our drafted letters as replies, we have quite a collection of these educational letters.  Oh boy, I mean the crazy returns pretty much stopped cold right then.
Our sales returned, right now we're doing about as good as ever but... I know better than to sing praises to the High Up one just yet, we're kind of waiting for the bottom to fall out again, but so far so good.

[vannvo_0]

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@luckythewinner wrote:

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@norwegian_kt wrote:

This is a terrific report. Thank you to @femmefan1946 for sharing!

I would like to hear comments on this graph from the original report, however. Am I crazy or does it seem like 21% is far too low? (I haven't tried to re-create the math yet.) I mean, 15% of retailers reported their costs of returns were 80-90%. And if you add up the guys with over-50% cost, that's 55% of the retailers. Ack.

Did I miss something?

---

The graph shows the percentage of retailers, not the percentage of their retail sales. 

What may be missing is whether the survey weighted the retailers based on their share of the overall sales.

If that is the case: 

If one of the retailers with a return rate of 15% has $1 billion in sales and one of the retailers with a return rate of 95% has $1 million in sales, then the weight of the 15% would be 1000 times greater than the weight of the 95%. 

---

It doesn't matter, a pound of lead is not heavier than a pound of feathers.

[norwegian_kt]

Aha. Thank you for that. 

I would love to know the situations of the retailers with those super-high return rates. Ugh.

[divwido]

Add to that the shipping companies who are not doing their jobs and that percentage goes way up.

I spent last week arguing with a UPS drop off store near me that four (FOUR)packages I had dropped off with them had vanished, never showing they made it to UPS.   Their opinion was to not know, not care, so what?    

[farmalljr]

I buy and sell through internet means. 

Here is one place that I think skews a bit of the costs. 

Walmart is a LARGE seller in ecommerce. I have a membership. That gives me free shipping on virtually everything I buy. 

If I order on the net and have it shipped from the warehouse/seller, It's free. So the case of canned chicken I order that probably costs 10+ dollars to ship fedex, is free to me. I only pay 18 bucks for the case, or there abouts. 

If I order a can of cat food and have it delivered from the local store, that's free too. They PAY someone to deliver that ONE can of cat food. ( An independent driver)

Because most retail anymore is giving free returns and in most cases, free shipping, I can easily see why RETAILERS are having such high costs of returns. They always HAVE had higher costs. Most of us here, unless you sell in certain categories, are NOT suffering those types of return rates/costs. Retailers also work on thinner margins, because they make it up with VOLUME. The very thing most of us do not have. 

SO yes, the article looks bad. But that is not a reflection on what most of us experince. I have a few returns a year, and those probably cost 20-50% of those items, if I am eating shipping both ways. But that is very few of my sales a year. Not enough overall to make me pay much attention to it, for my business. 

[santamonicajeweler]

Nordstrom solved this problem by opening local hubs for drop offs and pickups. 

www.nordstrom.com/stores

"Citing the National Retail Federation, it said returns jumped from 18.1% in 2020 to an average of 20.8% in 2021."

Very alarming! In order to attract more customers, Sellers have become more lenient on their Returns. This has caused increase in rate of returns from one in 6 sales to one in 5. 

[femmefan1946]

@vannvo_0 

Ebay always told us returns are bad for buyers, they reduce confidence and buyers become discouraged and leave

I think that for B&M/20th century retail, that was true.

And business schools have not caught up to the new normal.

Which is why I mistrust MBAs who have never run their own retail business, or even worked retail, preferably as either cashier or as customer service/returns.

@ricarmic  who sells stamps on the dotCA site has a batch of standard letters too, which he is nice enough to share with other sellers who have problems he has dealt with.

He's been in mail order selling for decades and has a firm grasp on long distance customer relations.

I notice that some of the eBay staff who occasionally drop into the Boards do seem to do some selling here, which helps.