Zara’s Move Suggests Free Returns May Become Rare
Zara in the UK has started charging a fee of £1.95 ($2.39) to return merchandise bought online. The fast-fashion retailer reportedly instituted the charge for environmental reasons.
Zara deducts the refund charge from the refund. Customers buying items online can still return them for free in stores. Mailed returns in the U.S. are still free for 30-days post purchase.
Consumers’ expectations around free returns may be somewhat lowered these days due their environmental sympathies. A recent study from Cycleon found almost two-thirds (64 percent) of U.S. consumers willing to pay extra when returning a parcel to subsidize greener carrier options.
In an online discussion last week, some of the experts on the RetailWire BrainTrust said return fees are likely to become more common among retailers, although the rationalizations may differ.
“I doubt that everyone will follow Zara’s path — but more retailers will,” wrote Neil Saunders, managing director at GlobalData. “Positioning the decision as an environmental one is smart, but in reality it is primarily a commercial decision wrapped in greenwash.”
“Charging for online returns now is more about reducing last-mile costs as gas prices soar (vs. ‘environmental reasons’),” wrote Lisa Goller, content marketing strategist. “And more retailers will follow.”
BrainTrust member Jeff Sward, founding partner at Merchandising Metrics, saw free returns as being a once valuable concept that has run its course.
“Absolutely charge for returns,” wrote Mr. Sward. “Free returns sounded great when the mission was to get customers comfortable shopping online. OK, they’re comfortable — really, really comfortable shopping online. Now the focus needs to go back to profitability and sustainability. Yes, a couple of customers may leave. But a couple of other customers may visit the stores more frequently, which would be a very positive outcome.”
A survey of U.S. online buyers from eMarketer taken last November found only nine percent returning merchandise in store when asked about their most recent return. The most popular return route was mail, cited by 37 percent; followed by alternative drop-off location (e.g., pharmacy, locker), 20 percent; and returned to a different retailer (e.g., Amazon
Online returns are rising and are seen as a margin killer for online selling. A recent Pitney Bowes
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Zara, however, risks disappointing customers who gain confidence in making an online purchase when they see free shipping and returns. Power Reviews’ 2021 returns study found consumers indicating free shipping (96 percent) and free returns (76 percent) as important considerations when shopping online.
Some on RetailWire’s BrainTrust in fact believe such fees are a surefire way to lower brand loyalty.
“Any online retailer that charges for returns, regardless of the reason, is pursuing a demand destruction strategy in the guise of cost containment,” wrote Mohamed Amer, independent startup advisor. “A better approach is to invest in better product descriptions, higher quality images and color fidelity, customer reviews and accurate sizing charts.”
“Consumers are on to all these extra fees and they aren’t happy,” wrote Georganne Bender, principal at Kizer & Bender. “It’s perfectly fine to charge for shipping, but an additional service fee, no matter how nominal, is a sticking point. If you have to charge an additional fee roll it into the cost of whatever I am buying and be done with it.”
But for others, the strategy looked alright — at least for now.
“Zara’s return fees are modest and shouldn’t be a deal-breaker for most shoppers,” wrote Carol Spieckerman, president of Spieckerman Retail. “Even so, Zara will need to tread carefully as uber-fast-fashion rivals such as Shein, and circular economy specialists like ThredUP, nip at Zara’s heels.”
An analysis by parcelLab in early 2021 of the NRF’s top 100 U.S. e-commerce sites found slightly more than a majority of retailers offered returns for free or with a “no need to return” policy. Of the 43 percent of retailers charging for returns, 59 percent charged more than $10.
Among those charging for mailed returns in the U.S., Uniqlo charges $7, Urban Outfitters, $5; J. Crew, $7.50; Lands’ End, $6.95; and L.L. Bean, $6.50. Belk and Wayfair customers are responsible for return shipping costs.
A Zara spokesperson told the BBC, “Customers can return online purchases at any Zara store in the UK free of charge, which is what most customers do.”
BrainTrust member David Mascitto, product marketing manager at Tecsys, saw this element as key to implementing return fees without alienating customers.
“If the retailer has an alternative option for accepting returns like BORIS (buy online, return in-store) which is free, I can see the charge for shipping returns back to the retailer becoming more commonplace,” wrote Mr. Mascitto. “It would deter shoppers from over-buying (knowing they will return anyway) and reduce margin erosion by making the returners foot part of the bill. It also makes good use of the store network.”