Nearly Half of Retailers Say Online Returns are Biggest Challenge

It’s a good news-bad news situation when it comes to retailers handling online order returns in their stores. Nearly three-quarters (72 percent) of retailers surveyed believe in-store returns can create opportunities to drive new sales. But close to half -- 43 percent -- say the process is one of their biggest challenges, according to a new study from Retail Systems Research (RSR), sponsored by retail technology provider Jumpmind.

“Those retailers whose returns processes have not been overhauled since their (likely) creation during the pandemic are particularly challenged, as the processes they cobbled together in a hurry are not fit for today’s scale of returns,” said Steve Rowen, managing partner at RSR. “The ability to accept a return is one thing; the ability to profitably handle that merchandise is far more complex.”

RSR reported that more than one-in-five retailers said “their stores were not designed for today’s more advanced customer service functions, such as order pickup, online returns, etc. Forty-one percent said that omnichannel fulfillment and returns require new in-store sales rep roles and workflows.”

This is particularly challenging as RSR found the average return rate for online transactions is three times higher than the return rate for in-store purchases.

But despite the opportunities retailers see for new sales when shoppers come in with returns, RSR found that only 17 percent of shoppers end up spending more money following a return in-store. “The vast majority of consumers surveyed -- 43 percent -- simply return the item and walk out, revealing that retailers have a long way to go in improving the process.”

“Retailers are not capitalizing on in-store returns in the way they expected,” said Lauren Cevallos, head of strategy and customer success at Jumpmind. “Instead, the cost and complexity of handling online returns is weighing down retailers’ store efficiency and profitability. Many are using disparate and legacy systems that make the process more challenging for both store associates and customers. The time is long overdue for retailers to modernize their in-store systems to minimize the pain and friction around returns and deliver on the promise and benefits of buy online, return in store.”