Australian eCommerce sees rising EOFY returns despite strict policies

Data from Loop shows a substantial increase in end-of-financial-year (EOFY) returns among Australian eCommerce retailers, revealing that more consumers are returning purchases even as overall sales continue to rise.

This year, Australia Post reported a 15% increase in year-on-year spending during the June EOFY sales. In tandem with this spending surge, new figures from Loop, an eCommerce operations platform, indicate the average number of returns per retailer increased by 27.6% in July compared to the same period last year. These insights draw on activity from hundreds of major Australian eCommerce brands, including retailers such as LSKD and Princess Polly.

The rise in returns aligns with recent Australian Bureau of Statistics (ABS) data, which recorded a 1.2% growth in retail turnover in June - marking the strongest monthly increase in more than two years. Despite the heightened spending, Loop's findings illustrate a clear shift in consumer behaviour. Shoppers, it appears, are becoming more discerning and apt to return items that do not meet their expectations.

Consumer caution

"Rising costs are pushing shoppers to spend more strategically – seeking discounts, delaying purchases, and even snapping up deals they later regret," said John-David Klausner, General Manager, International at Loop.

Loop's data also indicates that the rate of returns from June to July remained stable, pointing to a sustained behavioural change rather than a temporary response prompted by promotional sales. Klausner noted that persistent economic uncertainty may be influencing purchase and return decisions.

"With cost-of-living pressures still high and confidence only just starting to recover, shoppers may be less willing to hold onto items they don't truly need," he said.

Returns despite stricter policies

Significantly, this rise in returns comes as many retailers have tightened their returns policies. Some now require shoppers to pay a small fee at checkout to gain access to flexible returns options, moving away from the practice of free returns. Loop's data suggests that consumers remain willing to pay for the flexibility to return items, particularly in product categories where fit, size, or quality are variable.

The platform's "Checkout+" feature, for instance, provides shoppers with the choice to pay a small upfront fee in exchange for free returns later. According to Loop, over 80% of shoppers offered this service choose to opt in, which offers an avenue for retailers to manage margins more effectively.

"It's a smart way to protect margins while giving shoppers peace of mind. Retailers offering these kinds of policies are still seeing strong conversion rates. Shoppers may not expect free returns anymore, but they do want the flexibility," Klausner said. 

Business implications

Loop gathers these insights through its returns dashboard, which monitors the activity of thousands of eCommerce merchants globally. The platform supports online retailers in streamlining the returns process, automating exchanges, and offering order tracking to improve efficiency and customer experience.

In the context of growing competition across the eCommerce sector, understanding return patterns is becoming increasingly important for retailers. Analysing the reasons and frequency of returns can help retailers lower their costs related to reverse logistics, manage inventory more efficiently, and foster customer loyalty.

With ongoing pressure on household finances, many retailers are balancing the need to drive sales through attractive offers with efforts to limit the financial effects of increased returns. Platforms such as Loop are working to address these challenges by enabling data-driven and cost-effective adjustments to returns operations.

"As returns become a more frequent part of the shopping journey amid economic uncertainty, they also offer retailers a chance to transform potential dissatisfaction into positive experiences that build loyalty, drive retention, and mitigate losses in the long run," Klausner concluded.