The forecast: US online shoppers will return merchandise worth $279.03 billion this year, an 8.4% increase over last year, and well over double the $118.41 billion that shoppers returned in pre-pandemic 2019, per our latest forecast.

• This year, the value of US online returns will total 26.5% of what consumers spent. That's up from 19.8% just three years ago.
• Overall, consumers will return merchandise worth $906.64 billion this year, up 2.3% over last year.

What’s driving that growth? Two factors have driven that return volume growth: inflation and bracketing.

• Inflation has driven up the price of goods, which means the dollar value of items returned has also increased.
• Bracketing—the practice in which a shopper buys multiple versions of an item, tries them on at home, then returns those that don’t work—is on the rise. Sixty-three percent of shoppers have engaged in bracketing, up from 55% in 2019, per a recent Narvar study.

The challenge: Return rates are growing faster than revenues for 91% of retailers, per a survey by Appriss Retail and Incisiv.

• Each element within the returns process—the packaging, labor, and freight to and from the customer—adds up. Online returns cost retailers an average 21% of their order value, per a Pitney Bowes survey.
• Retailers that make the process complicated, or charge shoppers to return an online purchase, run the risk of turning shoppers off. For example, 54% of US consumers won’t shop with an online retailer that charges for online returns, per a Loop survey.

Various solutions: Retailers are taking different tacks to address the issue.

• Some have sought to make returns more convenient. For example, Walmart recently added curbside returns and returns pickup from home to its offerings, as well as extended its returns policy through January 31, 2023. And a growing number of retailers are working with third-party dropoff retail ecommerce return vendors such as PayPal-owned Happy Returns.
• Others are looking to provide shoppers with more information about an item before they click the buy button. For example, Walmart and Ikea each launched digital experiences that let shoppers use their smartphones to see what furniture would look like in their homes and Amazon earlier this year rolled out an augmented reality (AR) try-on feature for shoes.
• A handful of merchants began charging customers for returns to offset rising costs and protect margins. Fast-fashion companies Boohoo and Zara implemented returns fees earlier this year in the UK.

The big takeaway: The returns process is a critical element of customer experience that can either offer retailers a competitive advantage or drive shoppers to their rivals.

• Retailers should regularly analyze what’s driving shoppers to return items. Doing so can help improve the way product information is presented on their sites, such as leveraging AR try-on tech or simply showing what an item looks like on a diverse array of bodies.

This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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