Editor in chief at IamExpat Media
Christmas is over, which means the unwanted-present-returning season has begun. If you’ll be sending back some items you bought online, you’re not alone - an estimated one in six orders is returned, usually free of charge.
But concern is steadily growing about the effect that all this returning has on both online retailers and the environment - could a small return fee be a good thing for everybody? A group of economic researchers think so.
Consumers in Germany are ordering more and more things online. Internet shopping revenue is expected to grow by 11 percent this year to more than 70 billion euros, according to estimates by the Federal Association of E-Commerce and Mail Ordering.
But every sixth package winds up being sent back - which not only costs the retailers a huge amount in postage but also creates piles of packaging waste and pollutes the climate with well over 200.000 tonnes of CO2 every year.
The solution, according to a group of economic researchers from the University of Bamberg, is to introduce a return shipping fee.
Surveying online retailers, they came to the conclusion that a return shipping fee of around three euros could reduce the number of returns in Germany by 16 percent. With last year’s returns numbering some 490 million items, this amounts to about 80 million fewer returns each year, saving the climate almost 40.000 tonnes of CO2.
That’s not where the benefits end, according to study leader Björn Asdecker. Charging a return fee would also allow online retailers to drop their prices across the board - because at the moment they are adjusted to cover the cost of return shipping. This would mean that customers who return fewer items save money. In this way, the fee would make “e-commerce greener and fairer,” the researchers conclude.
The majority of small retailers who took part in the study would like to scrap postage-free returns but fear that this would put them at a competitive disadvantage.
For many large retailers like Amazon, free returns are a strategic advantage, making them economically worthwhile. They were therefore sceptical of a prescribed minimum return fee. The Federal Association of E-Commerce and Mail Ordering also warns: “A legally binding return fee would constitute a government intervention in the market and competition, which should always be the last resort in the event of a market failure.”