Return costs 1: Delivery costs
The first cost associated with returns for online retailers is associated with the actual delivery costs. Many online retailers offer free returns, and companies selling online have to incur the costs associated with such returns. Indeed, for companies that offer free deliveries, the costs incurred go both ways – getting the products to customers as well as back.
Return costs 2: Sorting costs
The next cost incurred with returns of online orders is sorting the products. Unpacking, checking, and repacking the items is a time-consuming process – all costs incurred by the retailer when dealing with returned online products.
Return costs 3: Tied up capital
Companies also incur costs associated with tied-up capital during the entire process. It may be months between sending the items out to the customer to receiving them back – all time that the money associated with the products are tied up.
Return costs 4: Disposal costs
For some items, it may not be possible to resell the items. They could be missing parts or there may be sanitary reasons why selling the items are infeasible. Costs associated with writing off the goods are a final costs incurred with returned goods.