How Much Do Returns Cost Retailers? (2007–2023)
Handling returns and refunds forms part and parcel of running a business, be it digital or brick-and-mortar. These days, customers are sending back purchases for a variety of reasons, with damages, defects, and fit issues ranking among the top return reasons.
This raises the question: How much do returns cost retailers? Here’s a look at the annual cost of returns in the United States in recent years.
How much do returns cost retailers every year?
|
Year |
Cost of returns |
|---|---|
|
2007 |
$171 billion |
|
2008 |
$208 billion |
|
2009 |
$186 billion |
|
2010 |
$194 billion |
|
2011 |
$217 billion |
|
2012 |
$264 billion |
|
2013 |
$267 billion |
|
2014 |
$284 billion |
|
2015 |
$261 billion |
|
2017 |
$351 billion |
|
2018 |
$369 billion |
|
2019 |
$309 billion |
|
2020 |
$428 billion |
|
2021 |
$761 billion |
|
2022 |
$817 billion |
|
2023 |
$744 billion |
According to the latest data, the annual cost of returns for US retailers totaled $744 billion in 2023, marking an 8.9% year-on-year fall from 2022’s $817 billion. It also accounts for approximately 14.5% of the total US retail sales for the year. In other words, out of every $100 retailers earn, $14.50 worth of merchandise is returned.
The annual cost of returns has largely been increasing since 2017. Over the past 16 years, it has only fallen four times—in 2009, 2015, 2019, and 2023. However, the costliest years have come in recent times. Prior to 2021, the annual cost of returns remained below half a trillion dollars, with the lowest coming in 2007 ($171 billion) and the highest in 2020 ($428 billion). In 2021, the cost of returns surged by 77.8%, to $761 billion, the largest annual increase between 2007 and 2023. Industry analysts attributed this to an overall growth in sales, which pushed return rates and volumes upward.
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From 2007 to 2020, the cost of returns rose at an average annual growth rate of 9.2%. This figure rises to 12.4% when the period is extended to 2023. The smallest annual increase came in 2013, when the cost of returns rose by 1.1%, to $267 billion, from $264 billion in 2012.
Return fraud is also becoming a major concern for businesses. Fraudulent returns totaled $101 billion in 2023, which is 13.7% of the total amount of merchandise returned.
Annual cost of returns: online purchases
|
Year |
Cost of online returns |
|---|---|
|
2019 |
$60 billion |
|
2020 |
$102 billion |
|
2021 |
$218 billion |
|
2022 |
$213 billion |
|
2023 |
$248 billion |
Data on the cost of online returns shows a similar surge in 2021, as the figure more than doubles from $102 billion in 2020 to $218 billion in 2021. This fell by a marginal 2.3% in 2022, to $213 billion. In 2023, it surged by 16.4%, to $248 billion, constituting 17.6% of total online sales for the year.
High cost of returns: how retailers are tackling the growing issue
The rising cost of returns is posing a problem for retailers, impacting their revenues and generating waste. In response, many have adopted various strategies to mitigate this cost.
According to a report, an increasing number of retailers including Amazon and Walmart have started to implement a “keep it” policy, preferring to tell customers to keep their unwanted purchases, even those costing as much as $300. Meanwhile, numerous others have started to introduce return fees.
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