Sachin Tati, a loyal customer of India’s largest online fashion portal Myntra, is irritated that his favorite shopping app is overhauling its returns policy.
Tati says he has used Myntra for over four years. He typically purchases several pairs of jeans, casual shirts, and shorts about every three months. Because of Myntra’s generous zero-fee returns policy, he often orders several items and returns most of them, keeping the one or two that he likes best. He estimates that he returns about 80% of the items he orders off the platform.
But Myntra’s returns policy recently changed. In November of last year, while shopping for jeans, his checkout page had an odd proclamation: “Your return rate is three times higher than average.” The platform penalized Tati by slapping a “convenience fee” of 299 rupees ($3.66) for current and future orders. The company also revoked some of Tati’s “Myntra Insider privileges” that allow members early access to sales and priority customer support. Myntra also informed Tati that if the high returns continue, he may get permanently suspended from shopping on the platform.
“I was angry, of course, because I didn’t see it coming,” Tati, 30, told Rest of World. “If they had charged me a delivery fee for everything, I would have been OK.” Tati said that as a “skinny guy,” he struggles to find the right fit and has, at times, had to order up to six items and return all of them due to sizing or quality issues.
“Nowadays, I avoid Myntra,” he said, adding that he prefers Amazon, which offers free returns.
Over the past six to eight months, users have complained about Myntra — which was acquired via Flipkart, which is majority owned by Walmart — slapping extra fees, denying cash on delivery payment options, and warning them about account suspension for frequently returning products. Three Myntra customers told Rest of World that these penalties have prompted them to switch to competitors offering free returns. Charging customers for returns has become a trend in the industry, with international fashion retailers such as Zara, J.Crew, and Abercrombie & Fitch, among others, also adding a return fee of up to $7 in the U.S.
Analysts say that the recent economic slump is forcing companies to pull back on perks like free returns, ushering in a new frugal era in online shopping. “I think, now, we’re in a very different economic climate than we were even a year ago,” Sky Canaves, senior analyst of retail and e-commerce at Insider Intelligence, told Rest of World, pointing to factors such as economic uncertainty, increasing inflation, and a drop in consumer spending. “The cost of processing the returns really is just eating into their [online retailers’] margins too much,” Canaves said.
Historically, online retailers in India prominently advertised free returns and longer return windows, extending up to 30 days, in order to encourage shoppers who would otherwise hesitate to buy from websites. In India, about 25%–40% of clothes sold online are returned, which can be a third more than the apparel return rate in the U.S. In 2022, total retail returns grew 2.8% to $613.94 billion in the U.S., according to Insider Intelligence. The return rate for the fashion segment in India is higher, as one in four items are sent back.
The biggest driver of online returns in apparel is “bracketing,” buying multiple items in different colors or sizes, only to return whatever doesn’t fit or work, according to Canaves. Wardrobing, or returning used items, constitutes 50% of all return fraud.
To cut the cost of returns, Softbank-backed Indian e-commerce firm Meesho has started offering discounts to users who forfeit their right to return. Ultra-fast quick commerce firms that promise to deliver in under 30 minutes are also nudging customers toward larger order sizes by offering up-front discounts for a basket size of 1,000 rupees ($12) and above — an attempt to reduce burn and turn profitable. Amazon and Flipkart, too, are reportedly denying user requests to return products.
The changes have drawn ire from customers. “Any time you take away something from consumers or make them pay for something that used to be free, you’re gonna get some outcry over it,” Canaves said. While charging fees for returns is becoming universal, Myntra’s move to punish frequent returners is unique and “sounds a little extreme,” Canaves said.
Myntra did not answer specific questions Rest of World asked about the impact of return fees, instead, a company spokesperson said that “any change in policy or practice that we implement is undertaken keeping in mind the interests of the larger customer base and their response to it.”
Sonal Sanghi was a dedicated Myntra customer. During the 2022 Myntra monsoon sale, Sanghi ordered nine pieces of clothing, of which she returned six, due to sizing and an unmet expectation. Around Diwali in October 2022, she ordered three pieces of jewelry, of which she returned one. Myntra has since designated her as a user with a “high return” profile.
“After [Diwali] I don’t think I ordered anything from Myntra because every time it’s showing a 299 rupee ($3.66) convenience fee, and I’m not ready to pay that,” Sanghi told Rest of World. In January, she abandoned a Myntra shopping cart that levied a 299 rupee convenience fee on a 200 rupee nail polish. Sanghi said she ordered two units of the same nail polish on Amazon, without “paying a single penny extra.”
The jury is still out on whether Myntra will manage to bring down costs by pushing away unprofitable customers and increase revenues through these tough moves, or if these policies could negatively impact customer loyalty. “This trend, it’s fairly recent,” Canaves said. “I would say in the last six months — so it’s still a little early to say what impact this is having on bottom lines.”
The war on returns is slowly working. India witnessed an 8% decline in overall returns in 2022, according to the India Retail and E-commerce Trends Report 2022. “Fashion and accessories” was the category that contributed to the maximum volume of returns at 20%. Shahbaaz Mohammed, a Myntra customer, said that for his latest sneaker purchase, he replaced the shoe five to six times instead of returning it for a refund — a change prompted by Myntra’s return fee.
In the meantime, Indian e-commerce users slapped with return fees are demanding transparency on how the algorithms evaluate their profiles.
In January 2023, while shopping on Flipkart, Tati was met with a similar message that his returns were “7X higher than average customer,” and he would be charged 75 rupees (92 cents) for his unusually high return rate. Tati suspects that his Myntra profile was linked to Flipkart’s database.
A lack of transparency around return data could hurt Myntra in the long run, analysts say. “If it seems arbitrary, or it seems unfair, they’re just not going to want to spend their money,” Canaves said.