With borrowing costs having ballooned, Lim says this group – who have up until this point formed a significant portion of online retailers’ customer base – is now facing a particular crunch.
What this means is that they are more cautious on spending than they have been in years – and, increasingly, more sensitive to the higher costs at the checkout.
Delivery and admin fees have been slowly creeping up. In 2021, as inflationary pressures ramped up and shipping routes faced disruption, retailers began to quietly raise checkout costs.
Many have started introducing higher minimum spend fees for free delivery. Others have simply increased costs outright. British retail giant Next, for example, was charging £3.99 to deliver to a customers’ home in May 2020, according to archive data, raising this to £4.50 in early 2021. It now charges £4.95 for the service.
At Argos, fast-track same day delivery for small items will cost shoppers £5.95, compared to £3.95 in 2021 and £4.95 in late 2022.
Alongside steeper fees for delivery, people are becoming aware that it is getting more expensive to send items back. A wave of fashion stores have brought in new fees for returning items with the aim of stopping people from over-ordering and returning clothes.
Oh Polly this week became the latest online retailer to clamp down on “repeat refunders”, saying it would be charging up to £8.99 for returns. Others including H&M and Zara have also brought in returns fees.
While this appears to be helping clamp down on serial returners, there are signs it could be having a knock-on effect on their wider pool of shoppers.
Active customer numbers across the online fast fashion retailers including Asos and Boohoo have tumbled over the past year.
They would argue the customers who have been lost are those who were constantly returning items. However, figures suggest the higher costs also mean that customers in general are more likely than ever to scrap an order rather than buying it.
According to Retail Economics and GFS, 55pc of people who abandoned baskets mid-order did so because they became aware that retailers charged for returns, up from 49pc last year. Eighty per cent said they did so because the delivery charge was too expensive.