Online Sales Pose New Challenges For Retailers

Tenor

In an effort to increase sales, retailers of all kinds are decreasing their dependence on brick and mortar stores and focusing on online sales instead. 

And while online shopping does appeal to pandemic-zapped populations, the app happy shopper has developed another habit - easy returns. 

Both Sides Of The Story

While online sales are making the neighbourhood store less relevant and making real estate investors perspire, ultimately, they serve the purpose of pumping revenue into retail firms that need it. 

Or do they? While it's true that online sales allow retailers to reach more customers, there's a flip side that could be denting retailer' profits major time. 

Servicing Returns Is Expensive

Per this report, retail returns in America jumped to an average of 16.6% in 2021, while being at 10.6% in 2020. 

🔄 That's over USD761 billion on merchandise that retailers had to take back and restock, more so in the apparel, clothing, accessories, and shoes categories - items where it's hard to gauge fit over a computer.

And a ton of those returns sprung from online orders. Per industry watchers, the average rate of returns for online purchases in 2021 was 20.8%, an increase from 18.1% in 2020. 

And that's a financial loss retailers will have to absorb more often as more customers favour online sales. 

And Then There's Fraud

Turns out, there's another mysterious cost to returns - returned goods are also opening the door to fraud. The NRF estimates that for every USD100 worth of accepted returns, retailers lose USD10.30 to fraud.