‘Online retail sees 25 percent orders returning,’ Gati study

While the online retail industry in India is growing at a good pace, a recent

study by logistics firm Gati, reveals one out of every four products sold online gets returned.

“Nearly four lakh shipments are delivered across the country every day, 25 percent of them are returned, making it a growing concern for e-tailers,” says Harshall Bhoi, Head of E-commerce operations at Gati. Returned goods push up the average cost of delivery by 50 percent, adding to the woes of the e-tailers, many of whom are yet to break even. For instance, if the cost of delivering a half-kilo parcel is Rs 45, and it is returned, the subsequent to-and-fro shipment charges hike it to Rs 67.50. So, the total loss to the e-tailing industry only due to shipment costs of returns stands at close to Rs 330 crores a year.

This has got logistics firms working on new business models where instead of couriering the returned product back to the e-tailer, the shipper would store it in a warehouse till a new order for it surfaces. Most of the orders returned are cash on delivery or COD ones. Product sizing constitutes two-thirds of all returns with accessories seeing high returns.