The percentage of ecommerce returns grew in 2021, but retailers are getting better at minimizing returns

January 10, 2023 (New York, NY) – There is a reason for retailers to be optimistic, as Insider Intelligence expects growth in returns to drop to more modest levels than in years past. Total retail returns will increase just over 2% in 2023, slightly below 2022’s growth. There were big spikes in 2020 and 2021, as pandemic-fueled online shopping and free return policies led to more items being returned. For this forecast, we are counting returns in the year in which the return occurs, not when the item was purchased. 

In 2022, total retail returns grew 2.8% to $613.94 billion. That represented 8.6% of total retail sales for the year, slightly lower than in 2021. 

Total retail returns will grow 2.2% to $627.34 billion in 2023, accounting for 8.5% of total retail sales. That figure will remain steady through 2026. 

For context, we forecast that total US retail sales grew 8.7% to $7.139 trillion in 2022, and we expect that figure to grow another 2.9% in 2023, to $7.346 trillion. Ecommerce sales jumped 9.6% to $1.052 trillion in 2022, and they’ll grow another 10.5% to $1.163 trillion this year.

Ecommerce returns totaled $203.22 billion in 2022, down 2.5% over 2021. This followed huge spikes in growth over the preceding years. The percentage of online purchases that were returned grew to 21.7% in 2021. It dropped to 19.3% last year and will fall to 18.2% this year. By 2026, the figure will drop to 14.7%.

“This is partly due to people returning to stores to shop,” said Wendy Louie-Lam, senior forecasting analyst at Insider Intelligence. “The other reason is retailers are implementing new policies and AI tech to minimize returns. Many online apparel retailers have implemented or are planning to implement new AI technology that should help with sizing to eliminate bracketing (people buying more than one size). Also, some online retailers are charging for returns.”

In terms of returns, we currently break out the apparel, accessories, and footwear category. That segment alone will account for 14.0% of all retail returns this year, or $78.06 billion. But the category’s percentage of online returns will be much higher, at 22.9%. That figure will decline slightly to 18.6% by 2026.

The ways in which customers can return items can affect brand loyalty and, ultimately, sales. In 2022, the total number of people ages 14 and older who returned items purchased online grew just 0.9% to 108.6 million; this group will increase by 1.2% in 2023. This growth is in stark contrast to the 9.2% spike in 2020, due mainly to more online shopping during the pandemic. As seen in the chart below, dropping items off at shipping companies is the most popular way to return purchases, followed by dropping items off at third-party sites. Having a shipping company pick up the item is about as popular as returning it to the physical store.

“Third party drop-offs for ecommerce returns are rising in popularity,” said Sky Canaves, senior analyst at Insider Intelligence.  “This is the only channel among the four covered by our forecast that will see a significant uptake in usage over the coming years, from 43.5 million returners in 2022 to nearly 50 million in 2026. Online retailers are seeking out more partnerships to help them manage returns in a cost-effective way while continuing to make the returns process convenient for consumers.”

Methodology

Insider Intelligence forecasts and estimates are based on our proprietary analysis, and include both quantitative and qualitative data curated from public companies, government agencies, research and media firms, and interviews with expert executives in relevant fields. We regularly re-evaluate available data to ensure our forecasts reflect the latest business and economic  developments and trends.

About Insider Intelligence

Insider Intelligence is a leading research provider focused on digital transformation. We empower professionals with actionable data, insights, and analysis to make informed decisions in a digital world. Formed as a merger of eMarketer and Business Insider Intelligence in 2020, we produce nearly 200 forecasts, 300 reports, 7,000 charts, and 1,500 newsletters across the Advertising, Media, and Marketing; Financial Services; Healthcare; and Retail and Ecommerce industries. Insider Intelligence is a division of Axel Springer S.E.