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.

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.

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/