Web goods returned will reach $6 billion in 2005, Jupiter predicts

Consumers will return $6 billion in good purchased online in 2005, representing 90 million product returns, according to new research from Jupiter Media Metrix. While a number of third-party vendors have sprung up to handle returns for e-retailers, merchants that concentrate only on improving the returns process are missing the boat, says Jupiter. To recapture the maximum value of returned merchandise, web merchants must look at the entire reverse logistics process, including opportunities to collect and analyze customer data, Jupiter says.

“Retailers need to look beyond the returns process to realize significant cost-savings. They should focus on the cost-saving benefits of an improved reverse logistics system that includes data collection, redistribution of goods and effective reporting,” says Darren Bien, Jupiter analyst. Companies need to build data on the reasons for returns, he says. Failing to identify the cause will prevent them from making changes to reduce or eliminate returns, says Bien. Failure to maintain consistent policies also can backfire on merchants, he notes. For example, after one retailer surveyed by Jupiter changed its returns policy to reverse ship for free only on damaged goods, returns due to damage increased dramatically while returns for other reasons decreased. The research also found that timely reporting and analyzing of collected data was the key to identifying trends in the reverse logistics process early.

“Companies need to learn more about why their consumers are returning goods,” Bien says. “The data they collect will be the only way for them to reduce returns, identify trends and most importantly, quickly redistribute the goods.”