Prime Day returns surge poses major challenge for UK retailers

New research from Manhattan Associates has highlighted the substantial impact that product returns following Amazon Prime Day have on both UK consumers and retailers.

The study, titled "Prime Day: Return to Sender", reports that a total of 78 million goods are returned by shoppers annually after Prime Day events. The findings suggest a growing operational and financial burden for retailers handling the surge in returns, as well as persistent dissatisfaction among consumers with the returns process.

Consumer behaviour

According to the research, over half (55%) of UK consumers typically return at least one purchase made on Prime Day. Notably, 33% of consumers will return one to three items, and more than half of all returns are accounted for by just 16% of shoppers. This concentrated trend contributes to the total of 78 million goods returned after the event.

Martin Lockwood at Manhattan Associates commented on the scale of returns that retailers face:

"The immense volume of returns after Prime Day creates significant pressure for retailers. The returns cycle is a critical part of today's retail landscape, and highlights the need for businesses to use more traditional returns processes, but to also optimise their store networks to efficiently manage this influx."

The survey also reveals that consumer expectations for post-purchase support are high: 39% expect a refund or exchange within 24 to 72 hours of returning a product, while 28% express frustration with delays in receiving their money back. Over six in ten consumers (61%) wish they could cancel or edit an order before it ships, but often find it difficult to do so.

Additional pain points for shoppers include having to pay for return shipping or fees (highlighted by 38%), slow refund processes (25%), and customer service issues during the return sequence (18%). Significantly, 45% of consumers report that a single negative returns experience has been enough to deter them from shopping with a retailer again.

Retailer challenges

Retailers are reporting a notable increase in operational challenges arising from the returns surge. The study shows that 23% of retailers experience return rates of 10% to 20% of total Prime Day sales. Despite this volume, only 18% of businesses are able to resell 10% to 20% of returned items at full value.

The cost impact is considerable. More than half (51%) of businesses incur an average cost of GBP £20 - £49.99 per return, and nearly 80% of the total cost is felt by under a third of businesses.

Operational issues are particularly acute during peak returns periods. The most prevalent challenge cited is shipping delays, which affect 45% of retailers. Stock re-allocation also emerges as a notable issue for 29% of businesses, while customer complaints (28%) and inventory inaccuracies (27%) present further hurdles.

On the ongoing implications of handling returns, Lockwood remarked:

"The return to sender phenomenon is no longer a minor backend issue. It's a frontline challenge impacting customer satisfaction and profitability. Our research clearly demonstrates the hidden strain retailers face from events like Prime Day. The sheer volume and complexity of returns demands a strategic, technology-driven approach."

Returns and customer loyalty

The study implies that managing returns effectively can have a direct impact on customer retention and loyalty. Lockwood explained the need for a broader approach beyond logistics:

"It's not just about processing items. It's about preserving customer relationships and recovering lost value. A smooth, transparent, and efficient return process can turn a potential negative experience into a positive one, helping foster long-term loyalty. Digital assistants can streamline the customer experience further by managing complex issues like delivery tracking, and post-purchase basket edits when required, allowing human agents to focus on 'white-glove' customer interaction."

Consumer sentiment suggests that streamlining and improving the returns process – from reducing wait times for refunds to removing or minimising return fees – would be key to driving better customer satisfaction and loyalty in the competitive retail environment surrounding Amazon Prime Day and similar events.