A year and a half ago, I wrote that I expected free returns to disappear from the Netherlands. Where do we currently stand? What’s the status quo among Dutch top e-retailers, and what is the impact of paid returns? Time for a recap, an analysis, and a fresh forecast based on recent developments.
Short recap: different times, different focus
In recent years, e-retailers have grappled with the rising costs of returns. As a result, many have re-evaluated their approach to returns management. As the e-commerce sector weakens, the focus has shifted from rapid growth to profitability optimization.
One of the most impactful areas where e-retailers can control costs is the handling of product returns. For years, they’ve been keenly aware that return costs are a major drain on their profitability. Interestingly, customers are more willing to accept an increase in shipping and return costs than a hike in product prices. On top of that, they often prioritize shipping fees over return fees when making purchasing decisions.
So, as I predicted in my previous blog post, it’s not a matter of “if” but “when” paid returns will become the standard across the e-retail landscape. Back then, first movers such as H&M and Zara had already taken cautious steps toward charging for returns, and Wehkamp was the first large online-only e-retailer to follow suit.
Where do paid returns currently stand?
From free returns to paid returns: a slow but steady shift
Although the transition to paid returns has been slow, recent data suggests that the industry is inching toward making it the new standard.
According to statistics from Sendcloud, a prominent provider of shipping solutions for more than 23,000 e-commerce businesses, the number of return shipments requiring payments from customers increased from 31% in Q1 of 2023 to 41% in Q4 of 2023. This marks a significant one-third increase within less than a year. Following the lead of major e-retailers, smaller e-retailers are now cautiously embracing the concept of paid returns. This is part of the reason why Rob van den Heuvel, CEO of Sendcloud, has stated that “the era of free returns is definitively over.”
Dutch top e-retailers: the status quo
When we look at the top 25 e-retailers in the Netherlands, the shift is not yet visible. Aside from Wehkamp, no other e-retailer on this list has shifted from free returns to paid returns in the past 18 months. However, of the five e-retailers that had implemented paid, retailer-managed returns by April 2023, three have significantly raised their return fees. H&M and Zara both increased their return fees by 1 euro, now charging €1.99 and €2.95, respectively. IKEA made an even steeper change, raising their return fee by €2 — it went from €2.99 to €4.99.
These changes suggest that the elasticity of return rates is limited, and e-retailers see room to raise their return fees — either to further reduce return volumes or to cover more of the costs associated with processing returns.
The tangible impact of paid returns
The impact of paid returns is already evident. The data shows that this policy can significantly reduce return volumes, making it an attractive option for e-retailers.
As early as in 2019, Sans Online, a pioneer of paid returns, experienced a 25% drop in returns. First, the low point was marked by 48% of their packages being returned. After implementing paid returns, that figure dropped to 37%.
Since introducing return fees, Wehkamp has recorded a 14% reduction in returns. This saves them an estimated 1.5 million returned items annually. This reduction is largely due to a decrease in customers who return many items. More customers now order only one size, and fewer customers order multiple items to pick one and return the rest. Graham Harris, CEO of Wehkamp, has urged the industry to make this necessary shift and make the sector more sustainable.
To further normalize paid returns, however, it’s crucial that large platforms allow paid returns.
Here’s an example that illustrates why: Danae Cosijn, who runs a web shop selling tutus, charges return fees. When customers buy directly from her web shop, only one in 20 items is returned. But when she sells her products through major platforms like bol.com, where free returns are mandatory, seven or eight out of 10 tutus are returned — often without any explanation.
Toward improved profitability and a more sustainable sector
In conclusion, it’s safe to say that paid returns are well underway, but the shift is still progressing slowly.
As paid returns will likely lead to a significant reduction in return rates, they can improve profitability and contribute to a more sustainable e-commerce sector.
But one question remains: How long will it take for major e-retailers and platforms to embrace the shift and start charging return fees?
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