Free returns disappearing from retailers

The era of free returns — an essential part of the rise of online shopping — is ending.

The big picture: Many retailers are fed up with paying for and processing an endless barrage of return packages, and they're starting to charge for it.

Zoom out: Returns surged during the height of the pandemic, when more people were shopping online.

• The return rate increased from 10.6% in 2020 to 16.5% in 2022, costing retailers more than $800 billion, according to the National Retail Federation.
• The packaging, freight and labor costs that go into returns mean processing them costs around a third of the price of the actual items, says Heidi Isern, a VP at Narvar, which makes software for retailers.

63% of consumers said they order multiple sizes or versions of the same item, with the intention of returning what they don’t want, according to Narvar. That’s up from 55% in 2019.

• “The living room is the new fitting room,” Isern says.

Zoom in: More than 40% of retailers are now charging return fees, per Narvar’s research.

• Retailers who have recently started charging for returns include H&M, J. Crew, Zara and DSW, Retail Brew notes.
• Even Amazon — the leader of the free-returns wave — now charges for some returns.

What to watch: Look for tiered returns, Isern says.

• Retailers might allow free returns in you sign up for a loyalty program, but charge less frequent customers who send items back.