‘We were getting crushed’: Brands cut back on free online returns to offset tariff costs
Free online returns — once a standard perk of e-commerce — are becoming the latest casualty of President Donald Trump’s tariffs.
After years of footing the bill for free returns, more retailers are raising the bar for customers who want to ship back unwanted goods. Some brands are even eliminating the perk altogether as they try to mitigate the steep costs of tariffs.
In the U.S., the number of retailers requiring a return fee has jumped from 66% to 72% this year, according to a new report from the National Retail Federation and Happy Returns. Around 33% of merchants surveyed said they began charging or increasing fees for returns due to “economic uncertainty and risk of tariffs,” per the report.
Joe & Bella, which sells adaptive clothing for seniors and people with disabilities, has offered free returns for online shoppers since the company was founded in 2020. But Joe & Bella manufactures all of its goods in China, one of the most heavily tariffed countries. Trump recently threatened to impose tariffs on Chinese exports as high as 130% by November 1, up from the current baseline rate of 30%.
Instead of raising prices, Joe & Bella implemented a shipping protection service in July that customers can opt into for a fee — usually $1 to $2 per order — which covers guaranteed shipping protection and offers free returns and exchanges. If a customer does not opt in, they pay for their own return label, typically $7 to $12 per package. The company is saving roughly 80% of its previous return-related costs, co-founder Jimmy Zollo told Modern Retail.
“We were getting crushed on returns,” he said. “The cost of freight, the cost of shipping… Nothing has gone down,” he said. “Especially for businesses our size, the cost of returns and exchanges is significant, and this allows us to control that cost a little bit better.”
Why retailers are rethinking free returns
Free online returns have long been a customer expectation, but tariffs and rising costs on everything from raw materials to shipping are forcing brands to rethink that model. Return fraud has also become more common, putting pressure on brands’ margins. Still, the strategy comes with the risk of deterring online shoppers who have grown to expect free shipping.
“Tariffs are causing a lot of financial pain on brands, and they’re looking for any type of lever to improve profitability,” said Jess Meher, svp at Loop Returns, a company that helps brands automate and streamline the returns and exchanges process. “A lot of times, if the brand decides to cover a return for a consumer, they might be at a net loss on that overall transaction.”
For small e-commerce businesses, tightening return policies can offset rising costs without forcing them to raise prices, according to David Morin, vp of customer strategy at Narvar, a logistics software firm. Retailers “don’t want to scare off the customer,” he said, but many are quietly testing new fees and shorter windows.
At the skin-care company Bejou, founder and CEO Carolina Lopez shortened the return window from 30 days to five days. Customers must now also provide a photo of the product to prove that there is a genuine issue before they’re issued store credit. Previously, returns were processed as a full refund to the original payment method.
Although Bejou’s products are made in the U.S., many of its raw materials — including packaging and formulation ingredients — are imported from overseas, mostly South America. Countries like Colombia, Peru, Chile and Argentina face a baseline 10% tariff, while others like Brazil bear a 50% duty. Lopez estimates her costs have risen by as much as 10% this year because of tariffs.
Springrose, an adaptive undergarments brand, is in a similar bind. Founded in 2023, Springrose originally offered free returns to attract customers. But the company recently implemented an insurance policy via the third-party platform Redo — the same startup that powers return insurance for Joe & Bella — to counterbalance tariff costs, along with other rising expenses like price of materials and manufacturing.
Like many tariff-hit brands, Springrose has also cut costs elsewhere, from reducing agency spending to renegotiating with suppliers. The new policy, alongside other measures, improved Springrose’s margin by about 700 basis points year over year, founder Nicole Cuervo said.
Brands that spoke to Modern Retail for this story said they haven’t experienced customer backlash yet. But data suggests retailers walk a delicate tightrope.
The NRF report found 57% of shoppers will walk away from a retailer after being charged for a return — a sharp increase from 40% last year. Yet the same report highlights a growing reality: Returns will cost the retail industry an estimated $849.9 billion in 2025, with online return rates reaching 19.3%.
The end of free returns
Consumers have come to expect free returns as part of the online shopping experience thanks to policies pioneered by companies like Zappos, now owned by Amazon, which let customers order multiple sizes and return what didn’t fit without incurring extra fees.
But years of rising shipping rates, labor costs and operational expenses tied to reverse logistics have steadily eroded the feasibility of offering free returns, putting pressure on that once-standard practice. During the pandemic, many brands extended return windows to appeal to quarantined shoppers. Once the pandemic receded, shoppers returned to physical stores. Inflation and the end of pandemic-era stimulus also made consumers more frugal. Since then, retailers like Sephora, Abercrombie & Fitch and H&M have pulled back on free returns. Even Amazon has tightened its policy, like charging customers $1 for dropping off packages at a UPS Store. The retailer also ended its “Try Before You Buy” service in January.
In other words, free returns are no longer the default, and tariffs have accelerated the shift.
At Redo, which powers opt-in return insurance for brands like Joe & Bella and Springrose, tariff anxiety has led to a wave of inbound interest from brands prioritizing profitability over customer acquisition, according to Brandon Thurgood, the company’s head of marketing.
As he put it, “We’ve won a lot of business because people are looking anywhere they can to claw back cost.”