In 2024, shoppers are projected to return an eye-popping $890 billion worth of merchandise, edging closer to the $1 trillion mark for the first time. According to the National Retail Federation (NRF) and Retail Dive, returns will account for 16.9% of annual retail sales, creating a massive financial burden for businesses. This rising volume of returns is now forcing retailers to reconsider one of their most beloved perks: free returns.
The convenience of online shopping has led to skyrocketing return rates. A key driver is bracketing, where shoppers—especially 51% of Gen Z—purchase multiple versions of an item with the intention of sending some back. While this behavior benefits customers, the costs for retailers are steep. Processing each return can cost $25 to $30, including shipping, restocking, and handling.
As CNN highlights, the problem doesn’t end with financial losses. Many returned products don’t make it back to shelves—they end up in liquidation warehouses or landfills, further squeezing profits and creating environmental concerns.
To offset these mounting costs, many retailers are beginning to scale back on free returns. Macy’s, Abercrombie, H&M, and J.Crew now charge for mail-in returns, while Amazon has introduced a $1 fee for UPS returns when closer drop-off options are available. Amazon has also started flagging “frequently returned” products, helping customers make more informed decisions and reducing return volumes.
This shift marks a turning point for the retail industry. Free returns, once seen as a way to build customer loyalty, are becoming unsustainable. Moving forward, retailers are exploring smarter strategies:
• Improving product accuracy: Better sizing charts, images, and product details to reduce buyer dissatisfaction.
• Rethinking logistics: Policies like Amazon’s “keep the item” refunds for bulky, low-cost products cut costs and streamline operations.
• Encouraging smarter shopping: Transparency around return fees and frequent returns may reduce impulsive buying and bracketing.
As returns climb toward $1 trillion, 2024 may be the year where free returns become the exception rather than the rule. For both shoppers and businesses, adapting to this new reality will be critical.
Read more on Retail Dive and CNN’s report on free returns.
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