Shoppers' returns are spiking to unprecedented levels — driving a $280 billion problem that's starting to backfire against them

• US shoppers will return more than one quarter of what they buy by dollar value in 2022.
• Inflation and a phenomenon called 'bracketing' are driving returns, Insider Intelligence says.

Shoppers will make returns equivalent to more than one quarter of their purchases this year, creating headaches for retailers and giving them more incentive to charge customers who make them.

In 2022, US consumers will send back $279.03 billion worth of merchandise, per a December 2 report from Insider Intelligence, a division of Insider's parent Insider Inc. That's equal to 26.5% of what consumers are expected to spend this year.

By contrast, returned merchandise accounted for 19.8% of all e-commerce spending in 2019, the last year before the pandemic forced many shoppers to buy more online.

As holiday shopping ramps up, retailers are fielding more online orders than ever before. Returns add another layer of cost and complexity for retailers, Insider Intelligence analyst Zak Stambor wrote in the report. Depending on the way they handle returns, retailers could be on the hook for packaging, shipping, and labor costs, he wrote. Some retailers have found alternatives to shipping returns, others are passing the cost of returns on to the consumer.

On average, online orders cost 21% of an order's value, Stambor said. "That ends up really eating into retailers' bottom line," he told Insider in an interview.

For consumers, though, easy and free returns have become an expectation, he added. "If you don't provide a good returns process, they'll go elsewhere," Stambor said.

Inflation, 'bracketing' are behind the spike in returns

The total value of e-commerce returns is increasing thanks in part to inflation, which continues to keep prices high for food, clothing, and a range of other consumer goods.

But Stambor also points to a phenomenon called "bracketing" for the increase. The term describes when someone buys multiple versions of a product, such as different sizes of a shirt, with the intent of sending back the ones they don't want to keep.

More than sixty percent of shoppers bracketed their purchases this year, Insider previously reported.

Retailers often pay shipping and other costs associated with returns. But once they're back, retailers often put them back into their inventory at a steep discount. In other cases, they simply throw the returned items away, which generates billions of pounds of trash.

Retailers have tried to keep the costs of returns down and the process convenient.

Amazon, for example, allows customers to return items purchased on its website at Whole Foods grocery stores, which the company owns. It also has a partnership with department store Kohl's, which serves as a drop-off point for Amazon returns. Walmart, meanwhile, is encouraging customers to make curbside returns during the holidays this year.

Other retailers are passing the costs on to consumers. Apparel retailers including Zara, Anthropologie, REI, Pacsun, and L.L.Bean say they'll refund customers for returned merchandise — minus a fee to cover the costs of handling the return by mail, trade publication Modern Retail reported earlier this month.

Charging consumers for returns is a risky bet, Stambor wrote. Roughly 54% of US shoppers say they won't make purchases from a retailer online if it charges for returns, according to a survey from retail reuse startup Loop that Stambor cited.

Some retailers are also experimenting with approaches that reduce the need to return items in the first place, Stambor said. One option is adding more details about products to their websites, such as whether a shoe's sizing runs large. Another involves using augmented reality to help potential buyers figure out what the item will look like on them or in their homes.

But Stambor said that consumers are likely to stick to bracketing and similar approaches for now. "It's a newer habit, but it's a deeply ingrained habit," he told Insider.