Retailers Brace for Profit Hit as Returns Rise During El Buen Fin

As the year-end shopping season approaches, kicked off by El Buen Fin, the rising cost of product returns threatens the profitability of Mexico’s retail sector. Retailers estimate that 16.9% of annual sales ultimately result in a return, according to the Mexican Association of Online Sales (AMVO).

During a conference, Manuel Cardona Zapata, Director of Government Relations, ANTAD, explained that returns are more common in online purchases, often due to discrepancies in product appearance or size. Cardona noted that while Mexican consumers are becoming more informed and demanding, generally reducing purchasing errors, the growth of digital commerce continues to highlight the need to improve the returns process and user experience.

Cost and Complexity of Reverse Logistics

For retailers, each returned product involves transportation, inspection, repackaging, and often a loss of product value. This reverse supply chain has become a significant operational expense in modern retail.

Retail chains typically absorb the cost of transporting and handling returned items, often without passing it on to the consumer. They also face added risks from fraud and abusive practices, as the National Retail Federation (NRF) reports that 93% of surveyed retailers view these issues as a serious business problem.

In Mexico, major department stores and digital platforms have integrated these costs into their operations. However, for small businesses, the impact can be considerable. David Pizaña, Vice President of E-commerce at the Mexican Internet Association (AIMX), warned that small merchants must adapt their cost structures to account for returns, often learning through experience.

Returns as a Tool for Customer Loyalty

The NRF suggests that returns can also represent an opportunity, serving as an additional customer touchpoint that can strengthen loyalty if managed transparently and efficiently.

According to AIMX, clear return policies and responsive customer support are key to building trust in digital channels. Marketplaces have been instrumental in enabling micro and small businesses to enter the digital ecosystem, pushing them to professionalize their logistics operations, including returns management, which was previously not part of their cost considerations.