The Free-Returns Party Is Over

If you’ve recently tried to return something you bought online, getting your money back might have gone a little bit differently than in the past. Maybe you received a store credit when you thought you were due a full refund. Maybe the retailer encouraged you to return your ill-fitting dress to one of their stores or, for reasons that are not at all clear, to your local Staples. Maybe encouraged isn’t a strong enough word, because dropping your return in the mail instead would have cost you $7.50, even though it used to be free.

For regular people who return things here and there, these marginal policy changes can pose some perceptual challenges—is something changing, or did you just misremember your favorite stores’ rules? In all likelihood, it’s the former: Quietly, and largely unnoticed by many buyers, the returns landscape is shifting. All kinds of retailers have begun to tweak their policies: Kohl’s, the suburban mecca of affordably priced clothes and housewares, now charges for return shipping, as does REI, the yuppie mecca of camping and hiking gear. Neiman Marcus won’t charge you for shipping as long as the product is back in their hands within 15 days of when you received it, but after that, you’re out $10. Even Amazon has made some tiny adjustments in its famously returns-friendly policies, charging customers $1 for dropping off packages at a UPS store if they forgo drop-off at a Whole Foods or Amazon Fresh location closer to them.

In a 2022 analysis of 200 retailers’ return policies, the post-purchase-logistics company Narvar found that 41 percent charge some kind of return-shipping fee—up from 33 percent in 2021. Amit Sharma, Narvar’s CEO, told me that that number is still rising; now it’s more like 44 percent. And charging for returns is just one example of what he said are many trendy policy changes. The last time you tried to return something, maybe you didn’t succeed at all, because the fine print revealed that your deeply discounted, deeply uncomfortable shoes had been banished to the realm of the final sale.

Returns are the intractable problem of online shopping. For nearly two decades, the expectation has been that customers can return anything that doesn’t spark joy, sometimes months after they bought it, no real reason required. This approach has been wildly successful for retailers, at least insofar as it has persuaded millions of people to buy clothing, shoes, furniture, and other fit- and taste-sensitive goods online. But it has also been a giant boondoggle, logistically and financially. Most kinds of brick-and-mortar stores have a return rate in the single digits, but for online purchases, the average is from 15 to 30 percent; for goods where the physical, tactile experience really matters, as much as half of sales might come back.

Internet retailers have been saber-rattling about the need to tighten up anything-goes return policies for years. Now they’ve found their chance. When everyone’s already hooked on online shopping, why let us return things for free?

Laissez-faire return policies became the norm because internet retailers wanted to shift the balance of power in the industry in their favor. Since the advent of online shopping, those retailers have bent over backwards to please consumers, sometimes at extraordinary cost to their own budget. At least initially, what they were selling was broadly unpopular. Americans once had a real aversion to buying most things online. Internet retailers had to convince millions of Americans that shopping in person, which by the 1990s many considered a social activity or a favorite pastime, was actually a hassle. They also had to overcome the distrust that many people felt toward what was then a novel technology. Buying something online sounded like a great way to get your credit card stolen.

To turn the tide of public opinion, online stores went about the work of highlighting their putative advantages—huge selections, low prices, no fight for parking on a busy Saturday—and eliminating as many perceived risks as possible. A major part of that effort was getting rid of fees: You wouldn’t be dinged a couple of bucks for the convenience of avoiding the mall, and you wouldn’t be dinged a few more if you decided you didn’t like your new stuff. For consumers, this was a gift of corporate-subsidized ease. According to one estimate, a single return can cost a retailer $10 to $20 before the price of transporting it back to the warehouse is even factored in. Nevertheless, absorbing this cost allowed for online financial transactions to mirror those available in physical stores, and companies that pioneered these policies, such as Amazon and Zappos, gobbled up sales from brick-and-mortar competitors, even if they lost money doing so.

This entrepreneurial bargain is at the foundation of many tech businesses launched in the past three decades: Losing money up front is fine if you’re using it to buy market share. For upstart retailers that could make the math work long enough, the gambit paid off—they scaled up, and their brick-and-mortar competitors have now mostly adopted their tactics online, sunk into irrelevance, or closed entirely. (RIP Bed Bath & Beyond.)  Even the industry’s winners, however, eventually have had to control the bleed. They’ve tended to try to account for returns losses by cutting costs elsewhere: increasing automation, using cheaper materials, cutting wages and benefits.

Abandoning generous return policies themselves was long seen as untenable, according to Neil Saunders, the managing director of retail at the consulting firm GlobalData. “There was a reluctance, because it was like, Well, if we do this, and no one else does, it puts us at a disadvantage,” he told me. Smaller retailers were scared of losing sales to bigger retailers that were better able to absorb the cost of lax policies, especially Amazon. But then came the coronavirus pandemic. Return rates skyrocketed as supply shortages rippled through the consumer market and people began buying more kinds of things online and trying out unfamiliar retailers. Those return rates still haven’t gone back to their pre-pandemic levels, Saunders told me. He believes the scales have already tipped in favor of reeling them in with blunt action.

Sharma, the Narvar CEO, told me that this view is in line with the multitude of methods that retailers are currently testing out to exert some control over the expense of high-volume returns, beyond just shipping charges: Amazon has begun flagging items with unusually high return rates so that shoppers know to be wary, which pushes the third-party sellers that create most of the site’s product listings to ensure that they’re accurate. Some retailers, including the footwear discounter DSW, promise free returns in exchange for joining a loyalty program, which pays off by collecting valuable data about consumers’ habits and targeting them for future promotions. Many retailers now encourage people to return things to their own stores to avoid shipping fees, or to third-party retailers that serve as drop-off locations for returns-aggregation services such as HappyReturns, which don’t require buyers to repackage anything or print their own label.  

Many of the tweaks are fiddly technicalities. A few months ago, I sent an ill-fitting pair of pants back to Madewell within a few days of delivery—something I’d done many times. Weeks later, I got an email about my store credit, which was a first. Unbeknownst to me, Madewell’s policy had apparently changed, and returns now needed to be received within 30 days for a cash refund, instead of just shipped within that time frame. (I reached out to Madewell to confirm the change but haven’t heard back.) For no appreciable reason, my package had sat around in UPS’s reverse-logistics system for weeks, so I was out of luck.

Convenience is always expensive for someone. For much of the internet era, the individual buyer hasn’t been footing the bill, but slowly, that has begun to change. Now if you don’t want to bear the brunt of convenience fees, you might be paying in legwork. For all the promise of online shopping, you could very well end up in a crowded parking lot on a Saturday with your return in hand anyway.

A little bit more friction in the purchase process can be a good thing. In part, returns rates have become so high because online shopping has been built into a perfect vehicle for overconsumption: Advertising is ubiquitous, unyielding, and tailored based on a multitude of personal data. Our ability to understand what we’re buying is poorly suited to the enormous scale of e-commerce. Your credit card is saved in your browser, your shipping address is saved at the places you regularly shop, and services such as Apple Pay now mean that you rarely even need to create an account before buying from somewhere new. The rough edges of buying things sight unseen have been sanded down to a fine gloss. If you know that you’ll be out even just five bucks to return something, that at least might be enough to make you abandon a digital shopping cart here and there, and gain back a little self-control at the margins.

But the consumer market is much different from how it was when these policies began to proliferate, in no small part because of their success. Traditional stores—and more than a few entire shopping malls—across the country have closed down, leaving Americans with far fewer options to buy what they need in person. Many types of products or sizes of clothing are now available largely online, and unless you live in a major city, they might not be available near you at all. Some retailers have begun to characterize their charges for returns as a fee for the convenience of having everything delivered to your home. But as long as meaningful in-person alternatives continue to dwindle, shifting more of those costs to the buyer isn’t the price of convenience—if nothing else about buying online changes, it simply redistributes the burden of e-commerce’s shortcomings to the people who need to buy things online.

Requiring buyers to pay for returns, adhere to shorter return windows, or accept store credit instead of real refunds is hardly the only way that retailers can get high return rates under control. In the best-case scenario, efforts to limit returns also mean that retailers clean up some of their own bad behavior—by, say, listing products more carefully or providing people with more detail so that they’re more likely to buy stuff they want to keep. Both Sharma and Saunders told me that retailers are indeed looking for ways to solve their own internal problems. On the whole, however, these issues have much more complicated fixes than just changing the details of a return policy. Listing products is labor- and data-intensive work that’s prone to errors, and retailers that rapidly expand their selections or rely on third-party sellers to make their own listings forfeit some of their ability to ensure that what they’re selling is presented truthfully. Bad listings beget bad return rates, and so does prioritizing growth over all else.

Free returns are what encourage people to tolerate bad product listings, misleading stock images, poor quality control, and the days-long wait for something they might have once run out to pick up in less than an hour. Remove the no-fee keystone, and the entire facade of convenience might fall. No one likes having to manage their own miniature nonprofit reverse-logistics business out of their home in order to send back all the stuff they bought that didn’t live up to their expectations. You’d probably like it even less if you were routinely paying for the privilege. Right now e-commerce giants seem to be betting that they’ve killed off enough brick-and-mortar competition that you’ll have to do it anyway.

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