What is Returnability?
Returnability is a concept that is unique to the traditional "bricks and mortar" bookstores. I know of no other retailer that employs this same kind of returns policy, and I have difficulty understanding why it's still allowed in this day and age. It is an inefficient, expensive, and environmentally unfriendly practice that can detrimentally affect an author's net profits. It can actually put you "in the red" if a bookstore buys too many copies of your book upfront!
How can that happen, you're asking? Well, basically, when a publisher marks its books as returnable for these bookstores, it is giving them the right to return those books, at any time, for a full refund if they're unable to sell them--regardless of whether those books are stickered with price tags or a bit scuffed from being handled by various people. In other words, the books may now be unsalable thus making it impossible for you to earn any kind of a profit from them in the future. But you still have to give the bookstore back their money in full.
A good friend of mine posted a public comment about this on my Facebook page last year, so I know he'll be fine with me sharing it here. He wrote, "I worked in both music and book retail for years. The music industry controlled returns very carefully. The book business seemed like a joke to me. You could return whatever you wanted. In most cases, the books went in the dumpster and only the covers were returned for credit. It sure made it easy to manage inventory levels! That was a long time ago. Has nothing changed?"
No. Nothing has changed. This returns policy remains. So, authors ... if you didn't already have enough good reasons to sell your books online, then this is another one.
The Only Strong Argument for Marking Your Book as Returnable
In my opinion, there is only one strong argument for marking your book as returnable and here it is: Unfortunately, if your goal is to become a bestselling author on a reputable national bestsellers list, then your book has to be sold through the traditional bookstores that report to those lists. Most traditional bookstores will only stock books that are marked as returnable. Consignment copies don't count toward the books they report to those lists. They track them differently.
If you decide you still want to sell your books through a traditional bookstore and aren't concerned with becoming a bestseller, then I recommend selling them on a consignment basis as part of an afternoon signing event. Bring your own inventory to the event. Take all unsold copies back home with you after the fact. Then you'll have no worries.
Or, you can simply stay online where there are no returns to deal with at all. You can still become an online bestselling author on sites such as Amazon if that status is important to your overall marketing campaign.