How Much Do Returns Cost Retailers? (2007–2022)
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.
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How much do returns cost retailers every year?
According to the latest data, the annual cost of returns for US retailers hit $817 billion in 2022. This is a 7.4% year-on-year rise from 2021’s $761 billion and makes up 16.5% of US retail industry sales for the year. In other words, out of every $1 billion retailers earn, $165 million worth of merchandise is returned.
The annual cost of returns has largely been increasing over the past 15 years. It has only fallen three times since 2007—in 2009, 2015, and 2019. 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 2022. Industry analysts attributed this to an overall growth in sales, which pushed return rates and volumes upward.
From 2007 to 2020, the cost of returns rose at an average annual growth rate of 9.2%. This figure rises to 14% when the period is extended to 2022. 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 $84.9 billion in 2022, which is 10.4% of the total amount of merchandise returned.
Annual cost of returns: online
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 falls by a marginal 2.3% in 2022, to $213 billion. This constitutes 16.5% of total online sales for the year.
Of the $213 billion worth of online goods consumers returned last year, as much as $22.8 billion (10.7%) were fraudulent.