The True Cost of Free Return Policies

Here at BravoDeal, as experts in online shopping and savings, we understand how free returns have reshaped e-commerce. While these policies bring undeniable convenience, they also come with hidden costs—both for retailers and for the planet. We have conducted a thorough analysis of the growing challenge that free returns pose for online retailers.

The Appeal of Free Returns

Free return policies have become a major selling point of modern online shopping. They provide peace of mind, allowing shoppers to buy without fear of being stuck with unwanted items. It's easy to see why this is such a powerful draw—according to the National Retail Federation (NRF), 76% of consumers consider free returns a crucial factor when deciding where to shop.

However, what many shoppers don’t realize is that these policies come with a price, and someone—be it retailers, the environment, or even consumers themselves—has to pay.

Rising Return Rates: A Growing Concern for Retailers

Returns have skyrocketed, creating a financial headache for online stores. According to the NRF report, total returns for 2024 are expected to hit $890 billion, with 16.5% of online purchases being sent back. That’s a massive chunk of lost revenue, but the hidden costs don’t stop there.

Retailers have to deal with shipping, restocking, and sometimes even throwing away returned items that can’t be resold. These expenses add up, leading to higher product prices, reduced profits, and, in some cases, businesses shutting down. 

So, do companies lose money on returns? The answer is yes, and in ways most consumers never consider.

The Environmental Costs of Returns

The impact of returns isn't just financial—it's also environmental. Shipping returns back and forth is also terrible for the planet. The trucks, planes, and delivery vans used to send items back create a huge carbon footprint. And then there’s the waste. Many returns, especially in fashion, don’t get resold. Instead, they end up in landfills or are incinerated.

This raises an important question: what happens to all the stuff we return? Often, items are discarded because processing and reselling them is too expensive. 

The result? A serious environmental issue that contributes to pollution and fast fashion waste. The negative impacts of online shopping go far beyond just extra packaging.

The Rise of ‘Bracketing’

A growing shopping habit is making things even worse: bracketing. This practice involves purchasing multiple sizes, colors, or styles of the same product, with the intention of returning those that don’t fit or match expectations.

According to Google Trends, searches for "bracketing" have been increasing, showing that more people are doing this, especially regarding clothing and footwear. What percentage of clothes bought online are returned? Estimates suggest that fashion items have some of the highest return rates, often exceeding 30%. Shoes are even worse—many companies struggle to resell them, leaving them with the dilemma of what to do with returned shoes. Unfortunately, some end up being destroyed, which adds to the already massive waste problem.

How Online Retailers Are Fighting Back Against Costly Returns

Faced with rising costs, retailers are implementing innovative strategies to manage the impact of returns while maintaining customer satisfaction. According to Forbes reports, some of the most effective measures include: 

• Encouraging in-store returns: Brands are pushing customers to return online purchases at physical stores. This helps with restocking and encourages people to shop for something else, reducing lost sales.
• Introducing return fees: While this might seem unfair to shoppers, it’s becoming more common. Are free returns actually free? Not really. Someone has to cover the costs, and with nearly 40% of retailers now charging return fees, it’s clear that the old model isn’t sustainable.
• Improving product details: Many returns happen because an item doesn’t fit or look the way a customer expected. To fix this, brands are offering better descriptions, sizing guides, and even virtual try-ons powered by AI. This helps shoppers make smarter decisions and reduces unnecessary returns.

As online shopping continues to evolve, retailers are trying to balance convenience with sustainability. 

This is where sustainable e-commerce and environmental impact on sustainability come into play. Finding ways to reduce waste, lower carbon emissions, and make returns more efficient is now a top priority for businesses that want to survive in the long run.

The reality is, the truth about online shopping isn’t as simple as free shipping and easy returns. These perks seem great on the surface but they come with real costs—financially, environmentally, and even ethically. The question is, are we willing to pay the price?

Sources:

• Forbes, “Total Cost Of Online Returns Breaks $200 Billion—Can Retail Afford It?” - Oct 03, 2023
• Forbes, “The Billion Dollar Return Nightmare: Why Retailers Are Enabling ‘Keep It’ Policies” - Dec 05, 2023
• Rebound, “The Pros and Cons of Free Returns”
• NFR, “NRF and Happy Returns 2024 Consumer Returns in the Retail Industry” - Dec 05, 2024
• Statista, “E-commerce returns in the United States - statistics & facts” - Dec 18, 2023
• Cleverific, “The true cost of returns: It’s not just about the money” - May 4, 2024