The Returns Edition
On holiday shopping, logistics, and tradeoffs
Noah here. If you order something from Amazon, Walmart, or Target this holiday season and need to return it, there’s a good chance they’ll say don’t bother. Whether it’s because it’s cheap, hard to restock, or too big, these retailers are increasingly offering no-return refunds. One WITI contributor reported being told to keep a $2,000 couch instead of bothering with the return (they eventually gave it to a relative). “In past years,” explained a WSJ piece on the practice, “retailers urged shoppers to return online orders to stores not only to reduce costs but also to boost sales because customers tend to make additional purchases while there.” This became a problem in 2020 as consumers were worried about entering stores and retailers had capacity constraints. Store returns, not surprisingly, are a lot less expensive than shipping.
Why is this interesting?
Returns are a big business. While in-store return rates are mostly in the single digits, online can be triple that. “For clothing,” explains Amanda Mull in an excellent piece on returns, “it can be even higher, thanks in part to bracketing—the common practice of ordering a size up and a size down from the size you think you need. Some retailers actively encourage the practice in order to help customers feel confident in their purchases.”
So what happens to all the boxes we return? Here’s Amanda Mull again:
We can dispense now with a common myth of modern shopping: The stuff you return probably isn’t restocked and sent back out to another hopeful owner. Many retailers don’t allow any opened product to be resold as new. Brick-and-mortar stores have sometimes skirted that policy; products that are returned directly to the place where they were sold can be deemed close enough to new and sold again. But even if mailed-in products come back in pristine, unused condition—say, because you ordered two sizes of the same bra and the first one you tried on fit fine—the odds that things returned to a sorting facility will simply be transferred to that business’s inventory aren’t great, and in some cases, they’re virtually zero. Getting an item back into a company’s new-product sales stream, which is sometimes in a whole different state, can be logistically prohibitive. Some things, such as beauty products, underwear, and bathing suits, are destroyed for sanitary reasons, even if they appear to be unopened or unused.
Like a lot of modern conveniences, the tradeoffs here are pretty clear. While it’s nice to be able to try on a few sizes and send back the ones that don’t fit, the waste—of both the goods themselves and the energy required to get them to your home—is hard to comprehend. (NRB)
Quick Links:
Friend of WITI Mickey Drexler continues his podcast run (CJN)
A fun NY Mag gift guide (CJN)
Beaverbrook Town House in London (CJN)
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An ongoing partnership where we highlight interesting McKinsey research, writing, and data.
The impact of ageism. New research quantifies the struggles that midcareer workers—those 45 and over—worldwide face and suggests possible interventions to level the playing field. Listen to a new episode of The McKinsey Podcast where Mona Mourshed, CEO of Generation, unpacks a recent report.
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Thanks for reading,
Noah (NRB) & Colin (CJN)
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