Help us end the fiscal year strong. Donate by June 30. Give Now

Return fees are happening because retailers are hurting

Kristin Schwab Jun 9, 2022
Heard on:
HTML EMBED:
COPY
Zara is now charging customers in the U.K. when they return online purchases via mail. With rising shipping costs, other retailers may follow suit. Greg Baker/AFP via Getty Images

Return fees are happening because retailers are hurting

Kristin Schwab Jun 9, 2022
Heard on:
Zara is now charging customers in the U.K. when they return online purchases via mail. With rising shipping costs, other retailers may follow suit. Greg Baker/AFP via Getty Images
HTML EMBED:
COPY

All the freebies that often come with online shopping might slowly become a thing of the past. Zara is now charging customers to return online purchases in the United Kingdom unless they’re returned in person. Plus, more brands, in general, are starting to charge for return shipping and restocking fees.

So what’s behind the reversal of free returns?

For retailers, returns are a pain. Warehouses have whole departments where people plug in toasters to make sure they work or give sneakers the sniff test, said Cathy Roberson at the Reverse Logistics Association.

“And if they smell like feet, they’re not going to go back into a store to be resold.”

Not a glamorous job, but someone’s got to do it because returns are surging. Americans sent back $760 billion worth of stuff last year; that’s almost double the amount from 2020. Online ordering is the biggest driver. And the rising price of shipping has made returns too expensive for retailers. 

“Some have been successful with hiding that in price increases, but it comes a time where you can just raise the price of an item just so much before you can’t do it anymore,” Roberson said.

That time is now, because inflation is also forcing retailers to raise prices. Return fees also help discourage return fraud and what the industry calls “wardrobing.”

“The majority of returns are just regular good customers. But then there are these purchasers that buy something knowing that they’re going to return it,” said Mehmet Altug, a professor of operations management at George Mason University.

Altug thinks more companies will start charging return fees. But will buyers balk?

“One of the top three reasons why consumers choose the site when they buy online is the ease of returns,” said Marshal Cohen, a retail analyst with NPD Group.

So companies have to walk a fine line: make money on return fees or risk customers walking away.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.