The case for consumer-paid returns in 2026
As a brand, you’ve made it your mission to create a compelling customer experience at every point of your shoppers’ journey with your brand – but as costs continue to escalate, how can you ensure that you’re not bleeding the business dry while trying to keep your customers happy?
Case in point: This year alone, USPS raised the price of its popular Ground Shipping service by more than 7%. As a merchant, you’ll need to work out how – and whether – to factor that shipping cost increase into the cost of doing business (potentially via higher prices), or whether to pass those costs on directly to your shoppers.
Five years ago, most retailers could afford to carry the costs of shipping both ways, but in the modern economy, it’s crucial to look at how to build a sustainable shipping strategy that keeps your customers happy, without harming your bottom line. And while many brands are still offering free shipping for purchases over a certain price point, they’re increasingly pulling back on offering free mail-in returns.
The rise of return shipping fees
What are the pros and cons of free returns? On the plus side, customers love it – nearly nine in 10 customers expect free returns. But the costs may outweigh the benefits in this case: Last year, retailers paid about $890 billion processing returns, which equates to 17% of total sales value.
That’s leading many brands to consider other models for processing returns – which include a “Keep Item” policy for low-value products, an expanded network of free in-store return options, and, increasingly, consumer-paid mail-in returns.
Here at Loop, we have access to returns data from thousands of merchants, and we’ve seen this evolution first-hand. The percentage of brands that charge fees for return shipping has grown by over 47 percent since 2020, with more than 63% of Loop merchants charging return fees today for mail-in shipping.
With operational expenses rising across the board, offering free returns is no longer a luxury that most retailers can afford – but the good news is, your customers get it. In fact, 70% of shoppers say that they’re willing to pay for a premium, convenient returns experience.
Ready to make the transition from free returns to a premium, consumer-paid returns experience that won’t alienate your loyal shoppers? Here are some tips for managing the process successfully.
Set expectations early
The best time to clarify your return shipping policy isn’t when your shopper is dissatisfied with their purchase and ready to send it back – it’s when they’re most engaged and ready to make a purchase. Shoppers are far more likely to accept a return fee when it’s presented upfront during the checkout process, not buried in the fine print.
The moment when your customer is preparing their shopping cart for checkout marks an ideal time to set expectations around returns, and offer solutions that can provide them with peace of mind. By offering Loop’s Checkout+ tool as an optional add-on during the checkout process, you’ll be able to encourage shoppers to pay a small fee upfront in exchange for access to free and convenient returns if they need it later. That sets the expectation that if they don’t commit to Checkout+, they’ll be on the hook for a more expensive return if a purchase doesn’t work out.
Being transparent around your returns process gives shoppers the choice to do what makes sense for them. Overwhelmingly, they opt for the premium returns solution which translates to a new line of revenue that your brand can use to pay all of your return shipping and software fees.
Customize policies by customer segment
That said, not all customer relationships are the same – and sometimes it’s important to nurture high-value relationships, or to set up guardrails against customers with a history of policy abuse.
Don’t apply the same rules around returns as a one-size-fits-all solution. Instead, you can customize your returns policies and fees for different types of customers, using Loop’s Workflows tool. For example:
For VIP/loyalty customers, consider offering free returns and exchanges as a rewards perk.
For first-time shoppers, apply your standard returns fees to the purchase.
For serial returners, apply your standard returns fees and introduce stricter rules – such as requiring manual inspection of the product for damage prior to issuing a refund.
By personalizing your return shipping fees and policies based on the customer type, you’ll be able to deliver curated experiences that nurture high-value shoppers while protecting your brand’s profits from abusive tactics.
Build loyalty with free exchanges
If a customer is returning a product, there’s no guarantee they’ll shop with your brand again. But if they opt for an exchange? That means they’re taking a step towards continuing their relationship with your brand – and it’s worth rewarding them for that.
Consider following the model of a brand on Loop: If the customer wishes to make a return, then a $6.99 fee will be deducted from their refund. But if they choose to exchange their purchase for a new item, they’ll receive free return shipping, and be gifted a 15% discount code to apply to the new item. Policies like this create a powerful incentive for shoppers to give your brand a second chance, helping you increase customer loyalty and lifetime customer value.
Consumer-paid returns are a smart business strategy
In today’s ecommerce landscape, making the move to consumer-paid returns presents a solid opportunity to build resilience into your business.
Consumer-paid returns help you protect your margins. You’ll be less impacted by changes in carrier shipping fees, and, once your “serial returners” are forced to foot the bill for return shipping, you’ll likely see the rates of common abusive practices like wardrobing and bracketing drop substantially. And, as we’ve seen in our own data, brands that have started charging return fees have not seen any significant drop in sales.
By embracing tools like Checkout+ and Workflows, you can provide an elevated and customized returns experience. Checkout+ helps you bring in a new revenue stream while cushioning the cost of return fees for shoppers who opt in. Workflows enables you to build personalized returns policies based on customer type, whether you’re waiving return shipping for VIPs or exchanges, or adding extra precautions for frequent abusers. Customizing your policies based on customer segment or use case helps you deliver more value for your high-priority customers, while preventing abusive customers from damaging your bottom line.
Future-proof your business with smart return policies that will set up your brand for sustainable success. Book a demo of Loop to learn more!
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With Loop, your brand can offer everything from refunds to direct exchanges to shopper incentives and more. Even better? These exchanges build your business.