WASHINGTON — Consumers returned an estimated $428 billion in merchandise to retailers last year, approximately 10.6 percent of total U.S. retail sales in 2020.
According to a report released by the National Retail Federation, of those returns, roughly 5.9 percent were fraudulent, equating to $25.3 billion.
While the total rate of returns is in line with recent years, online returns more than doubled in 2020 from 2019 and are a major driver of the overall growth of returns. In 2020, ecommerce accounted for $565 billion or 14 percent of total U.S. retail sales. Approximately $102 billion of merchandise purchased online was returned, with $7.7 billion (7.5 percent) labeled as fraudulent.
The survey found that for every $1 billion in sales, the average retailer incurs $106 million in merchandise returns. Additionally, for every $100 in returned merchandise accepted, retailers lose $5.90 to return fraud. The top categories of merchandise returned include auto parts (19.4 percent), apparel (12.2 percent), home improvement (11.5 percent) and housewares (11.5 percent). More than one-fifth of returns were completed through credit cards, followed by cash (12.7 percent) and debit cards (7 percent).
“Last year, we saw an increase in returns of online purchases as the pandemic forced more consumers to shop online,” said Mark Mathews, NRF’s vice president of research development and industry analysis. “Retailers view the return process as an opportunity to further engage with customers, as it provides additional points of contact for retailers to enhance the overall consumer experience.”
NRF’s holiday forecast predicted a 3.6 percent to 5.2 percent growth over the 2019 holiday season to a total between $755.3 billion and $766.7 billion. On average, retailers expect 13.3 percent of merchandise sold during the 2020 holiday season to be returned. The estimated cost of these holiday returns is $101 billion. More than one-third of respondents indicated they planned to hire additional staff to handle returns over the holidays. The vast majority expect to see the bulk of returns during the month of January.