Actually, that’s the title of the article I just finished that I want to pass along to you. It’s about how retailers, and ultimately brands, deal with returns and how much they costs.
That returns are a pain in the ass and cost a lot of money is something we all already know. But some of the numbers in the article- especially for online- indicate that they are way higher than I would have imagined. And they are particularly high for apparel and shoes.
Part of the reason we (I at least) may not have understood quite how much returns cost is because the accounting systems I’ve typically seen aren’t set up to aggregate those costs. There’s no line item called, “what returns cost us.” The expense is typically spread around in various accounts. As you’ll see from the article that depends to some extent on what happens to the product after it comes back- not just with how it’s handled during the return process.
Here’s the link to the article. It’s short and worth a read. After you read it, you might think about how well you’re doing at measure return costs. It’s hard to control something you aren’t measuring well.