What do you do when the ugly sweater you got for Christmas doesn’t fit? Chances are, it’s pretty easy to return it—and maybe even hopefully exchange it for something you actually like. Now, multiply this by millions of dissatisfied customers, and you’ve got “Returnuary,” a term I have recently read in the news to describe the period of time in January, after the holidays, when retailers see an influx of returns.

The scary part? According to an article published on PYMNTS, the rate of product returns went from 8.8% in 2012 to 14.5% last year. Returns aren’t just a pain for retailers —reverse logistics are also a massive expense.

Who is to blame? Sure, there are people buying an item or outfit for a day, before returning it. Bracketing, ordering multiple sizes of an item and return those that don’t fit is a more common practice than in the past. Or people shamelessly fraudulently returning items, sometimes influenced by advice they hear on social media.

So who is to blame? I see a few factors contribute to this increase, for example

  • Wardrobing: Shoppers buy an item, use it for a day, and then return it.
  • Bracketing: Customers order multiple sizes or variations of a product and return the ones that don’t fit.
  • Fraud: Shamelessly fraudulent returns, often fueled by social media “hacks.”

However, I believe this trend started with online marketplaces adopting excessively liberal return policies. Marketplaces often offer free, no-questions-asked returns to keep customers happy, putting pressure on their third-party sellers who sometimes support a large part of the cost of returns. Coupled with next day shipping, and returns are becoming painless for customers, who made free returns am important criteria when shopping online. Over time, DTC brands adopted similar liberal policies to be able to compete with marketplaces.

Going back on these policies should not be taboo, especially if these are making a business unprofitable. Return logistics have a significant impact on businesses bottom line, and should be carefully designed. There are many options between free returns and charging a fee, for example allowing free returns on the first order only, or giving the option to get refunded in store credit to avoid a fee.

Going back on these liberal return policies shouldn’t be taboo—especially if they’re heavily impacting a business profitability. Return logistics have a massive impact on profit margins, and businesses must carefully design their return strategies to balance profitability and customer satisfaction/retention. There’s often a middle ground between free returns and charging high fees that scare customers away. For example, offering free returns only on first orders, or incentivizing customers to choose store credit instead of refunds by waiving return fees.

This increase in returns also shows the need for retailers to be proactive about returns and limiting them in the first place. Initiatives could be using AR, have accurate size charts and visuals, shipping in appropriate packaging, etc. 

Finally, while the majority of product returns are legitimate, it is estimated that 10 to 15% of returns are fraudulent. Technology powered by AI or serialization can help. But at the end of the day, the cost of returns comes from various scenarios that need to be addressed, and return policies are far more important than many business owners realize.

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If you are interested in learning more about what can be done to limit reverse logistics expenses, I have written about it a few years ago. While this article may be a little outdated, most of it is still valid as of 2025 : https://fmaingret.com/2023/03/how-can-online-businesses-effectively-deal-with-product-returns/

Another article on UPS acquisition of Happyreturns in 2023 can give insights on customers behavior and reverse logistics : https://fmaingret.com/2023/11/from-q3-hurdles-to-holiday-hustle-are-ecommerce-returns-a-good-bet-for-ups/