A flood of online Christmas returns is increasing a £7billion nightmare for retailers.

As the festive period ends, return warehouse workers are scrambling to process millions of unwanted gifts at an average cost of £20 per package, according to nShift, a returns management company.

ReBound, another returns specialist, said one in three fashion items bought online is sent back – double the rate for goods bought in shops.

Al Gerrie, chief executive of ZigZag Global, which provides online returns software for clients including Selfridges, Gap and Superdry, told The Sunday Times: 

‘It’s not unusual to have a 30 to 50 per cent returns rate for womenswear and 20 per cent for menswear in the UK. 

‘Germany has the highest rate, which can be north of 50 per cent.’

Professional services group KPMG said spiralling costs mean returns have become ‘something of a Pandora’s box’ for retailers.

It puts the bill for British retailers at around £7billion a year. 

And returns can slash profits by up to 30 per cent, according to the US-based Reverse Logistics Association.

Many retailers do not charge customers a fee if they return goods, but some have introduced them, including Hollister, which charges £5, and Uniqlo which charges £2.95. Next charges £2 per collection.

Many factories are running 24 hours a day throughout the year, with staff opening, checking – and even sniffing the item – before it is steamed, repressed, repackaged and resold as new.