52% of Americans Plan to Return Holiday Gifts Purchased Online — Making Flexible Return Policies a Must for Merchants

Survey findings from Phelps United, a leading eCommerce brand accelerator, show that 76% of consumers scrutinize return policies, with most expecting free shipping on returns and a hassle-free experience.

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Purpose of This Study

With inflation hitting a 40-year high this year and retailers concerned about rising costs narrowing margins, roughly 60% have said they are making changes to return policies, such as reducing return windows and adding shipping or restocking fees.

A new survey by Phelps United suggests that such changes may be short-sighted, as hassle-free returns have become such an intrinsic part of the eCommerce experience that imposing stricter return policies may result in long-term brand damage for merchants.

Working with the third-party survey platform Pollfish, we asked 600 U.S. adults about their expectations surrounding eCommerce gifts and returns this holiday season. The 600 respondents were prescreened to include only consumers with household incomes of at least $50,000 who said they expect to receive gifts via online merchants this holiday season.

Here are the results of that survey.

Key Insights 

1. Online shopping is nearly universal today—and consumers are more likely to return gifts than not.
2. Consumers are most likely to return clothes, gifts that are the wrong size or type, and gifts from their parents.
3. More than two-thirds of consumers return gifts by the first week after Christmas.
4. With returns so ubiquitous, consumers are more likely to scrutinize return policies—and they favor online retailers that offer the most flexibility.

1. Online shopping is nearly universal today—and consumers are more likely to return gifts than not.

The pervasiveness of online shopping, and the expectation of returns, was nearly universal among respondents. Among the findings:

• 86% of respondents said they plan to buy and send at least three holiday gifts to others via online merchants, with 28% planning to send at least five gifts and 13% to send 10 or more gifts.
• 68% of respondents expect to receive at least three gifts via online retailers, with 18% expecting to receive at least five gifts and 7% expecting to receive more than 10 gifts.
• 52% said they expect to return at least one gift they received via an online merchant this holiday season, with 47% of this group saying they plan to return at least three gifts, 19% saying they plan to return at least five gifts, and 6% saying they plan to return at least 10 gifts.

2. Consumers are most likely to return clothes, gifts that are the wrong size or type, and gifts from their parents.

Respondents gave a variety of reasons for holiday gift returns. Among the findings:

• 62% of consumers expect to return a gift because it is the wrong size or type; 40% expect to return a gift because they already have one; 28% would rather exchange it for what they like more; 20% say it’s because they don’t like the gift; and 13% say it’s because they would rather exchange the gift for cash.
• The gift respondents say they are most likely to return is clothing (71%), followed by shoes (53%), gym wear (26%), cosmetics (20%), kitchen appliances (20%), glassware (19%), candles (18%), and sweets/chocolate (16%).
• Respondents said they were most likely to return gifts from their parents (41%), followed by friends and neighbors (36%), a sibling (25%), an in-law (24%), a co-worker (23%), and their grandparents (17%).

3. More than two-thirds of consumers return gifts by the first week of Christmas.

Although the majority of consumers (58%) prefer flexible return policies that allow 30 days or more for a return, the great majority of respondents prefer to return products quickly and in as little time as possible. Among the findings:

• 69% of respondents said they plan to return gifts in the first week after Christmas, with nearly a third saying they would return gifts the day after Christmas (15%) or even before Christmas (15%).
• While most respondents (60%) said they expected it would take an hour or less for them to return gifts, 40% said it would take two hours or more, with 11% saying it would take them more than four hours.
• Nearly two-thirds of respondents (65%) said they would prefer to return gifts to a physical store, compared to those who would rather return gifts through the mail (35%).
• The great majority of eCommerce gift-givers take advantage of gift receipts, with 85% of respondents saying they include them in the gifts they send, and 79% saying they are typically included in the gifts they receive.

4. With returns so ubiquitous, consumers are more likely to scrutinize return policies—and they favor online retailers who offer the most flexibility.

With the high percentage of returned holiday gifts, it’s unsurprising that most consumers take a close look at an online retailer’s return policy before making a purchase. These consumers said they were more likely to do business in the future with retailers that offered flexible return policies.

Among the survey’s findings:

• More than three quarters (76%) of respondents said they typically review an online retailer’s return policy before sending a gift.
• Consumers cited a number of aspects of return policies as incentives to do business with an online retailer in the future, including:
  • Free shipping on returns (cited by 82% of respondents)
  • A flexible window of 30 days or more for returns (58%)
  • Hassle-free or no-questions-asked returns (52%)
  • Return label included in the package (50%)
  • Ability to return an item bought via eCommerce to a physical location (31%)

“Americans expect to return gifts they receive via online retailers today,” said Adam Shaffer, President of Phelps United. “It’s become such an intrinsic part of the holiday shopping experience that when retailers decide to tighten their policies, they risk leaving a negative impression—a bad aftertaste that may impact long-term brand perceptions. That’s why we recommend flexible return policies for online merchants.”

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Methodology

Phelps United used the third-party survey platform Pollfish to conduct an online survey of 600 U.S. consumers, with an annual household income of more than $50,000, who said they expected to receive gifts via Amazon or other eCommerce sites this holiday season. The survey was fielded on November 25, 2022. Researchers reviewed all responses for quality control.

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About Phelps United

Phelps United is a leading eCommerce brand accelerator, enablement platform, and marketplace agency. It empowers brands to access, navigate, and grow within multiple sales channels while protecting their brand integrity and eliminating channel conflict. Offering a flexible “buy and sell” model along with full agency services, Phelps United invests in its brand partners by purchasing inventory, increasing sales and profitability. In addition, Phelps United accelerates brands through its channel-focused divisions with a proprietary OPTIX software platform that orchestrates eCommerce, marketplaces, broadline distributors, and direct-to-retail sales channels. For more information, explore our website.