You may have recently noticed a new trend emerging amongst fashion retailers – charging for returns of products bought online. But why are retailers making this move now? The reality is that the cost of living crisis is putting consumer spending power under pressure which in turn is making many retailers look at how they can make their businesses more efficient. Delivery costs for returns of products bought online have long been a notable cost for retailers and as a relatively standalone cost, changing returns policies can be a neat way for retailers to recover costs.
When do consumers have the right to return products?
Products bought in-store
By law retailers must refund consumers for returned products bought in-store if products are faulty or unfit for purpose if the return or complaint is made within 30 days of the date of purchase. Consumers have additional rights beyond this time period but further conditions will apply.
Products bought online
There is additional protection for consumers purchasing products online – consumers can return most products bought online for any reason (whether the product is faulty or not) provided the consumer notifies the retailer of their intention to do so within 14 days of receipt of the product and then actually returns the product within 14 days of the date that the consumer notifies the retailer of their intention to return the product.
There are some exclusions from this rule including personalised items and products which are sealed for hygiene reasons.
Of course, retailers can have returns policies that are more generous than what is required by law and often do so (for example, 30 day returns policies are common) but by the same token retailers are able to apply further conditions to any elements of their policies that go beyond their legal obligations.
Can retailers charge for the cost of return?
Though not an issue for products bought in store, online sales raise the issue of the cost of returning a product to a retailer.
If a product bought online is faulty or otherwise not fit for purpose, the law is as it is for products bought in-store and additionally, retailers are responsible for the cost of returning the product.
The consumer has changed their mind
If however, there is no issue with the product and the consumer has simply changed their mind, the consumer will be responsible for returning the product(s) and bearing the cost of the return.
However, if retailers want consumers to bear return costs, retailers have to inform consumers of this before the consumer buys the product in question.
Retailers also have to inform consumers of the cost of the return. Where the retailer cannot be certain of the cost, retailers must give consumers a reasonable estimate of the cost and make it clear that the cost will be borne by the consumer.
To remove the risk of providing an unreasonable estimate, retailers can introduce a fixed charge for returns as appears to be the current trend. However, again, it will be necessary for such charges to reasonably reflect the actual costs of the return. To calculate this, retailers will need to consider how the return will be sent – by post, by courier or otherwise. Retailers will need to ensure that there is no profit element to the returns where they have a fixed fee.
A key advantage of fixed fees for returns for both retailers and consumers is certainty. From a retailer’s perspective this will also make it easier to give clear messaging to consumers about return costs.
If a retailer is changing its returns policy to make it more costly for consumers (for example, moving away from free returns) it will be particularly important for the retailer to ensure that consumers are aware of the change with clear messaging including at the point of sale. Additionally, retailers will need to ensure that they update their terms and conditions accordingly.
Should retailers charge for returns?
Retailers looking to find efficiencies in their businesses may be finding few reasons not to charge for returns in the UK. The real question is whether consumers are open to this change. The initial response to the trend from consumers has been muted which may suggest an acceptance by consumers that the tide is turning. The reason for this response is unclear but may well relate to the cost of living crisis and an acknowledgement that belts are tightening across the board.
It should be noted that the consumer reception to these fees is likely to be tied to the current trend of tying delivery fees to packages returned rather than the number of products in the applicable package. Should this change, the perception of consumers is also likely to change. Where a retailer charges per product rather than per package, it would also be prudent for retailers to make this clear so that there can't be confusion for consumers who may assume that all retailers charging for returns are taking the same approach.
Retailers with stores may also wish to consider allowing free returns to their stores both to provide consumers with an alternative to returns charges and also to help increase footfall into bricks and mortar stores. At present, there is no clear consensus amongst retailers charging for returns and this could become a distinguishing factor for those brands who are able to offer this alternative.
Another consideration for retailers may be that as well as enabling retailers to recover delivery costs of returns, removing the right to return products may have an impact on the percentage of products returned overall. If that proves to be the case, inventory will get that bit easier for retailers.