The era of free ecommerce returns is undergoing increasing scrutiny as many retailers reassess and adjust their return policies as they face mounting financial pressures, environmental concerns, and changing consumer behaviors. Once a hallmark of customer convenience, free and unlimited returns became the cornerstone upon which customer trust and loyalty was earned and purchases derisked. Now, these retailers are part of a growing trend where about 40% of retailers are now charging return fees, up from 31% in 2022, according to Narvar research. This shift could redefine the industry, marking a pivotal moment in the relationship between online shoppers and retailers.

The Financial Burden of Returns

Returns have become one of the most challenging financial burdens in e-commerce. Projections for 2024 suggest U.S. retailers will endure losses exceeding $100 billion annually due to returns, contributing to an estimated $890 billion global economic impact. Processing returns often incurs costs surpassing 30% of the product’s original price, encompassing transportation, restocking, and operational expenses. Seasonal and rapidly obsolescent items, as well as items damaged in transit, further exacerbate these losses and erode profitability, compounding the financial strain.

The rapid growth of ecommerce through the pandemic has intensified this issue, but now that the online shopping rate is returning to the mean, the returns rate hasn’t followed suit. Categories such as apparel and electronics are particularly affected where sizing issues and unmet expectations drive higher returns.

The Environmental Impact

Beyond financial implications, the environmental impact of returns is staggering. In the United States alone, returned goods generate an estimated 9.5 billion pounds of landfill waste annually and contribute 24 million metric tons of carbon dioxide emissions. Many returned items cannot be resold as new, often ending up in liquidation channels or being discarded entirely. This unsustainable cycle is prompting retailers to factor eco-friendly considerations into their return strategies.

Evolving Returns Policies

To mitigate these challenges, retailers are tightening return policies. Strategies include shorter return windows, fees for mail-in returns, and restocking charges. Leading brands like American Eagle, DSW, and H&M are at the forefront of these changes, signaling a departure from lenient practices of the past (see a larger list of retailers charging e-commerce return fees in December 2025, which is by no means exhaustive, at the bottom of this article). Even Amazon started charging $1 for certain return types.
Some retailers are also exploring innovative solutions to mitigate return rates. Technologies like augmented reality (AR) and virtual try-on tools aim to improve purchasing accuracy, reducing the likelihood of returns. Enhanced product descriptions, interactive sizing guides, and AI-driven recommendations are further helping customers make more informed choices.

Another emerging trend is the adoption of “returnless refunds,” where customers are allowed to keep items that are not economically viable to process as returns. While this reduces logistical costs, it raises questions about waste and sustainability, as well as abuse by bad actors, highlighting the need for balanced approaches. But there are very real instances where the “Keep It” approach makes sense. Low-cost/low-margin items, for example. Or, when there are sanitary concerns and items cannot be resold; such as food, undergarments, and pillows.

Avoid Policies That Are Too Strict

Many online stores are simultaneously making their return rules stricter to stave off returns fraud. They might ask for proof of purchase, shorten the return window, or create tough return conditions. While this sounds like a good way to prevent financial losses, it often backfires.

Customers really care about how easy it is to return things. If a store makes returns too difficult, many shoppers will simply stop buying from that store. These practices may be intended to deter wardrobing and bracketing that lead to returns without question, but they frequently alienate customers by failing to account for shopping histories and past loyalty. Plus, people get frustrated when returns are complicated, take too long, or seem unfair. Even customers who used to love a brand might walk away if they have a bad return experience. And inconsistent policy enforcement undermines trust and deters repeat purchases, even among previously loyal customers.

The good news is that stores can protect themselves from fraud without pushing customers away. The best approach is to use smart technology to understand different types of customers, monitor patterns, etc. Some shoppers return items more often than others, but that doesn’t mean they’re trying to cheat the system. By creating flexible return policies that treat loyal customers well, stores can actually make more money in the long run. The key is finding a middle ground. When stores get this right, customers feel valued and are more likely to maintain brand affinity.

Aligning Customer Expectations and Merchant Realities

While consumers remain attached to the convenience of free returns, their expectations are gradually adapting to new retail realities. Surveys reveal that flexibility and transparency are more valued than free returns. Clear communication about return policies, quick refund processing, and multiple return options are becoming critical components of the post-purchase experience, and ultimately, customer satisfaction. And when return fees are employed, the key is to make them reasonable; perhaps introduce them slowly and increase them over a long period of time.

Retailers are also leveraging behavioral insights to enhance return strategies. The “refund effect”, where customers receiving swift refunds are more likely to make additional purchases, is a key consideration. By optimizing refund processes such as offering incentives for exchanges, or offering gift cards that have a slightly higher value than the original purchase to keep the item, rather than return it, retailers can retain customer loyalty while mitigating costs.

A Balanced Approach

The future of ecommerce returns lies in finding equilibrium between consumer convenience and economic sustainability. Retailers are expected to continue refining policies, potentially introducing tiered return structures where loyal customers or higher-value purchases receive more lenient terms. Technologies that predict return likelihood based on purchase history or provide real-time feedback during the buying process may further reduce return rates.

Environmental sustainability will also play a more prominent role in shaping returns strategies. Partnerships with recommerce platforms, investments in circular economy initiatives, and improvements in reverse logistics can help align business objectives with environmental responsibility.

A Sustainable Path Forward

The e-commerce return ecosystem is not collapsing but evolving toward greater efficiency and balance. Retailers are navigating a delicate path, aiming to uphold customer satisfaction while safeguarding profitability and addressing ecological concerns. The era of unrestricted, free returns is giving way to a more nuanced model that prioritizes thoughtful consumption and sustainable practices.
As this transformation unfolds, the key to success will lie in innovation, transparency, and adaptability. By embracing these principles, retailers can forge stronger connections with consumers while fostering a more sustainable and economically viable future for e-commerce.

Table 1. Returns Fees Charged by Well-Known Retailers in December 2024.

Retailer/Brand	Returns Fee
Abercrombie & Fitch	All customers: $7.00
American Eagle Outfitters	All customers: $5:00: (excluding specific categories)
boohoo	All customers: $6:00
Dillard’s	All customers: $9.95
DSW	Non-Members: $8.50; Gold or Elite members: Free
H&M	Non-Members: $5.99; H&M Members: $2.99
JCPenney	All customers: $8.00
J.Crew	All customers: $7.50
Kohl’s	All customers: Kohl’s does not pay return shipping costs
Macy’s	Non-Members: $9.99; Star Reward Members: Free
Oh Polly	All customers: From $2.99 for store credit to $9.99
PrettyLittleThing	All customers: $7.00
REI Co-op	All customers: $7.99
Saks Fifth Avenue	All customers: $9.95
T.J. Maxx	All customers: $11.99
Urban Outfitters	All customers: $5
Zara	All customers: $4.95

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