Cross-border Returns: Few and Far Between

International orders just don’t come back very often. Unlike their American peers, cross-border shoppers rarely return their purchases, according to a study of more than half a million orders fulfilled through FiftyOne Global Ecommerce between 2009 and 2011.

Even among apparel retailers, whose domestic customers often return more than a quarter of what they buy, returns from international customers are uncommon: Less than 7% of all merchandise ordered from FiftyOne apparel merchants during the past two years was returned.

The relatively low expense and distraction of returns management has probably helped ecommerce merchants rapidly expand overseas, where analysts see explosive growth. For example J.P. Morgan’s 2011 Global Ecommerce Revenue Forecast estimates that by the end of this year, revenues will have increased 72% since 2008, reaching $493 billion. The forecast projects continued growth, too, with a 48% increase over the next two years, approaching $728 billion in 2013.

Why don’t cross-border shoppers return much? Apart from obvious practicalities—international returns can be more complicated and costly—data on returns across countries, regions, merchants, and types of merchandise all suggest that buyers outside the U.S. simply aren’t accustomed to returning what they order. This is supported by a comparison of merchants known for liberal return policies and merchants requiring customers to pay for return shipping, which showed no significant difference in their customers’ return rates. Across all FiftyOne merchants and countries, customers returned only 5% of all merchandise sold between April 2009 and March 2011.

Canadians led the world with a return rate of 8% across all merchandise categories. Australians and Asians were the least likely customers to return their purchases, sending back only 3% of what they bought during the past three years. Overall Europeans wound up in the middle, returning 5% of their purchases. Although relative distance from the U.S. appears to neatly correlate to cross-border return rates, a country-by-country view contradicts this. For instance British customers returned 7% of what they bought, while the French returned less than 3%. More than 5% of merchandise sent to Germany was returned, roughly doubling France’s return rate.

No Indication of Increasing Return Rates

A quarter-by-quarter view of global returns doesn’t suggest that cross-border shoppers are becoming more likely to return their purchases, either. In fact return rates dropped in recent quarters, with both apparel and non-apparel buyers keeping more of what they bought during the past year. These fluctuations may not be meaningful or statistically significant, but they counter concerns that cross-border shoppers are learning to send back more of what they buy from American ecommerce merchants.

Until international returns show signs of increasing, merchants can take advantage of this key difference between domestic and cross-border ecommerce. Budgetary savings from lower return rates can be used to offset international shipping costs, duties, and taxes; or to strategically lower prices to gain share in competitive markets. These savings may also fund in-country acquisition campaigns or investments in conversion, including richer site translation. The paucity of cross-border returns may also allow customer care resources to be reallocated, either to native language support or other efforts dedicated expressly to cross-border customers.

Methodology Return data are based on the value (USD) of a representative sample of merchandise ordered through FiftyOne Global Ecommerce between April 2009 and March 2011 and authorized for return at any time before August 2011. To distinguish apparel return percentages from mixed merchandise, orders from merchants whose catalogs contained less than 80% apparel, including shoes and accessories, were considered mixed merchandise and counted with non-apparel.