Ecommerce returns: Key challenges and trends in 2025
When it comes to ecommerce returns, the old rules no longer apply.
While it’s as important as ever to deliver a great customer experience at every brand touchpoint, merchants are struggling with higher operational costs, including tariffs and high shipping rates. At the same time, they’re facing an increased incidence of fraud and a pullback in consumer spending.
All of this means that profitability is far from guaranteed—and while free returns may have been par for the course five years ago, modern brands need to set up sustainable returns strategies that help them maximize revenue retention.
Let’s look at how to build a returns strategy designed for today’s ecommerce environment.
The high cost of free returns
For ecommerce brands, it can cost around 30% of the original item price to process a return. And in some cases, the item can’t even be resold—often resulting in unsold inventory being dumped at landfill sites, with a net loss to the retailer.
Shopper behavior poses another problem for merchants, in the form of “bracketing,” or purchasing multiple items to try on with the intention of only keeping one. As many as 63% of online shoppers admit to bracketing at least on occasion—and our own study found that of shoppers who engage in this behavior, 30% do so at least once a week!
Once upon a time, most brands were happy to cover the return costs for the sake of making their customers happy. But amidst rising operational costs and increasing abuse of their return policies, those days are gone: By the end of 2023, Happy Returns found that 81% of merchants had started charging a fee on at least some forms of returns.
While customers still appreciate free returns, they’re now far more accustomed to paying a fee to send products back. So, if your free returns strategy is no longer economically feasible for your brand, there’s no need to second-guess your decision to start charging for returns.
How to build a sustainable returns strategy
A sustainable ecommerce returns strategy starts by building a returns policy that fits the needs of both your brand and your customers. This should include:
- A generous returns window: Brands win over consumers by giving them the luxury of time to assess whether a product fits their needs. So don’t default to a minimal 14-day return policy—many brands offer 30, or even 45-day return windows, and offer extra time around the holidays.
- Multiple ways to return products: Customers also appreciate a variety of options for returning products. While mail-in returns should always be an option, you can offer them the chance to drop off items to a nearby drop-off center for shipping consolidation, or return items in-store if you have a location nearby. This not only offers additional convenience, but it may help you reduce or eliminate reverse shipping costs on drop-off methods for both your brand and your shoppers.
- Seamless, hassle-free returns: Whatever you do, don’t make it more difficult for customers to return products just because the cost of returns are rising. That will only backfire and keep them from shopping with you again. Instead, make returns as simple as possible, using an online returns portal where customers can initiate their own return requests without needing to engage with your CX team. They should be able to see the costs and process associated with each return method, so they can make an informed decision. Once their return is under way, they should be able to track the package on a branded order tracking page, so they can see when they’ll receive their refund or exchange credit.
- An opportunity to offset returns costs: Many of your shoppers are used to bracketing—and they’re not likely to change that habit. In that case, encourage them to offset the cost of their future returns by paying a small fee at the time of their initial purchase. With Loop’s Offset product, you can give customers the option to pay a discounted cost upfront for access to a hassle-free return later. That can help you recoup fees that you can put towards reverse logistics expenses, enabling you to protect your profit margins. Worried about this affecting your customer experience? Consumer expectations around return fees have changed - 70% are now willing to pay for more convenient, premium experiences – and 50% already have.
- Easy exchanges and store credit options: When it comes to returns, don’t default to a refund. Consider asking shoppers to pay for returns if they want a refund, while covering the cost of return shipping if they’d like an exchange or store credit. This strategy will help you re-convert a significant number of your shoppers, helping you retain revenue from the initial transaction and even generate upsell revenue from shoppers who decide on a higher-priced item.
Building a returns strategy that helps you maximize profits while delivering a great customer experience requires the right technology to help you optimize costs and workflows. That’s where Loop can help.
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