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German online retailers see generous returns policies erode margins

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The generous approach of German retailers to returns is costing them billions, according to a new report.

A survey by the University of Bamberg found that around 280 million parcels and 487 million articles were returned in Germany in 2018. This amounted to 16% of parcels delivered and 12% of products ordered being returned.

The total cost to the industry is around €5.46 billion, with respondents citing postage and transport costs, loss of item values and labour costs associated with assessing returned items.

The policies in the country are fairly generous. 28% of respondents had increased their withdrawal period over recent years.

Most retailers offer returns significantly beyond the statutory minimum of 14 days, with 28 days being the average. Many were looking to improve the transparency of the process with better notifications as well as more choice in returns solutions.

Zalando is one German retailer with a fairly liberal policy to returns. However, the fashion retailer has changed this recently in the UK, Spain, Italy and Ireland, although it has not suggested it will do the same in its home market.

Bjoern Asdecker from the University of Bamberg told InternetRetailing in an email that he didn’t think Zalando would change its returns policy in Germany.

“Germany has a history of almost 150 years of free returns, which has established customer expectations. Moreover, competition is really tough. I don’t see that happening over the next couple of years. Instead, I see more subtle measures such as closing accounts of serial returners or probably offering a full refund only within the first 14 days of the return period (after that refund via gift cards).”

Another recent forecast by the German Retail Trade Association found that revenues in online trading in Germany will increase by around 9% to €57.8 billion.

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