Returns often not worth the effort for online retailers

When consumers want to return goods, online stores regularly refund the money without asking for them to be sent back – even if there is nothing physically wrong with the product. This surprising finding emerged from research by Dutch financial newspaper Het Financieele Dagblad (FD), which spoke to dozens of customers who have obtained goods for free in this way.

It is no secret that many online retailers have long been struggling with reverse logistics. But the news that consumers are often being allowed to keep products that are in perfectly good working order comes as a surprise. Companies such as Bol.com, Coolblue and Philips are all apparently guilty of such practices. Although retail experts warn that this encourages abuse of the system, it is expected to become increasingly common in the future. For example Amazon, which launched on the Dutch market earlier this week, offers ‘allow to keep returns’ as a standard option for external sellers.

“It’s unhealthy and will destroy the market,” comments Henk Hofstede, a retail economist at ABN-Amro, in FD. “The biggest online players might be able to sustain this approach as a way of attracting customers and gaining market share, but all the other retailers below them – the ones who have to make a profit to survive – won’t.” Besides that, Hofstede claims it also spoils consumers. “Everyone who is offered this option will soon get used to it, which will stimulate irresponsible consumption.”

E-tailer’s dilemma

But there is no doubt that online retailers face a dilemma: the process of receiving, checking and possibly repairing returned goods sometimes costs more than the resale value. The FD study revealed that the large majority of products that consumers were allowed to keep were priced at less than €25. The returns process can soon end up costing just as much. In 2018, Dutch broadcaster NOS and Afterpay calculated that returning a parcel costs an average of €12.50, so for low-margin products it can work out cheaper to let the customer keep them.

Reverse logistics linked to extra CO2 emissions

Whereas retailers risk setting a precedent by not asking for goods to be sent back, demanding that they are returned generates extra CO2 emissions. According to a spokesperson from Coolblue, ‘fewer delivery vans on the road’ is one of the reasons for letting consumers keep unwanted orders, besides ‘greater customer satisfaction and lower costs’. Arie Kuiper, CEO of BuyBay which gives returned products a new lease of life, points out that allowing customers to hold on to such goods is always better than asking for the products to be sent back, only for them to be destroyed – and that still happens too.