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Retailers paying more to process returns for items bought online

Cost being passed to consumers
Online returns
Posted at 1:42 PM, Jan 05, 2022

Many Americans are just now getting around to returning holiday gifts.

For gifts ordered online, returns can be a hassle — not just for consumers but for retailers as well.

Returns processor Optoro reports that it costs retailers $33 to process a $50 returned item. And while it may sometimes be free to return an item purchased online, that's not necessarily true.

Retail experts say customers have always been paying for returns, and now that stores are paying more, those costs may get passed on to consumers.

"It's all about making some profit, which is the arithmetic difference between what you buy goods from — a marketplace — for a customer, and what a customer is willing to pay," said Mark Cohen, the director of retail studies at Columbia University. "The difference is gross margin, and the gross margin has to cover the discounting — the handling, the shortage and, of course, the returns and transportation."

Cohen says customers see a difference in both prices and policies. Retailers have quietly been tightening up their return policies, meaning customers should take a closer look at items before purchasing them online.

"Retailers are going to start enforcing a 30-day limit in terms of time to return things," Cohen said. "There are already retailers who impose restocking fees on things like electronics to offset the heroic cost of dealing with returns."

More people shopped during this recent holiday season, so retailers expect a high number of returns.