The decision to provide free returns has become a balancing act between meeting customer expectations and running a profitable business.
The widespread availability of free returns has led to a higher percentage of returned items, increasing costs across the board, as retailers must inspect, repackage, and restock each returned product.
Still, the research shows that as many as 88% of consumers across some of the largest ecommerce marketplaces, such as the United States, Germany, or the UK, expect free returns as a standard part of the offer.
Consequently, whether or not to offer this option to customers has turned into a burning question that sellers on domestic and international online marketplaces must answer.
This article will examine why free returns are still a major sales-driving force and whether completely excluding them from your offer is worth the risk.
Key takeaways
- In 2025, the average return rate in the ecommerce industry is 24.5%.
- The return rates for clothing items range from 25% to 40%
- 62% of people say they’re more likely to purchase an item online if they know they can return it for free.
- According to the NRF, the cost of returned items in the retail industry exceeded $890 billion in 2024.
- 47% of online shoppers stop buying from a brand if they disagree with its return policy.
What does offering free returns mean for online businesses?
The return rates in physical retail are consistently lower than for items purchased online. On average, shoppers return between 8 and 10% of items they purchase in-store, compared to 24.5% of products they buy online, while for certain items, the average return rate is even higher.
This disparity reveals one of the key challenges online shoppers face when buying products online. It’s difficult to understand whether the item you’re interested in is the right size or if it meets your quality expectations when shopping online.
Even though new technologies, such as AR, are making it easier for buyers to see what a product would look like once they put it on or place it in their homes, making these technologies an integral part of the shopping experience still requires substantial investment.
Consequently, sellers on online marketplaces face high return rates, which lower their revenue considerably and often hinder their expansion into international marketplaces. On the other hand, returns policies and free returns remain as important as ever.
They’re still one of the most potent tools online sellers have at their disposal to establish trust and build loyalty as they enable sellers to clearly communicate delivery conditions, offer item replacements, or use other methods of limiting their costs.
To make matters even more complex, eBay’s Cassini and other internal search engines of online shopping platforms use free returns and return policies as ranking factors.
Sellers on these online marketplaces risk lower visibility of their product listings if they exclude free returns from their offers.
The statistics behind free returns
Offering the option to return an item has become the norm for brick-and-mortar and online stores.
However, due to a large volume of returns, offering customers the opportunity to return items they purchased from their online store for free is putting online sellers in a substantial financial bind.
Let’s look at the figures that reveal the importance of free returns for ecommerce businesses and show the financial impact free returns can have on an online business:
- According to an NRF study, 76% of consumers consider free returns a crucial factor in their purchasing decisions.
- A UPS study from 2025 found that 88% of shoppers review a retailer’s return policy during their shopping experience.
- The Global Returns and Profit Report indicates that 41% of shoppers consider a brand’s return policy before buying a product.
- DHL’s 2025 Delivery and Returns Trends Report shows that 78% of shoppers in Europe won’t purchase an item from an online seller if they don’t trust the returns provider.
- The previously mentioned NRF study reveals that 93% of retailers see return fraud as an issue for their business.
- Sellers must spend up to 30% of the product’s original price to process a free return.
- In the United States, 2.6 million tons of returned items end up in landfills every year.
- According to Gitnux, 67% of online shoppers are ‘serial returners’, meaning that they buy multiple versions of the same product with the intention of returning at least some of the items they ordered.
- Retailers lose $10.30 per $100 of returned merchandise due to return fraud.
These figures reflect the current state of affairs in the ecommerce industry. On the one hand, the overwhelming majority of people shopping online expect a free return to be part of the offer, while on the other, sellers on online platforms struggle to keep up with the costs of free returns.
Are free returns still a necessity on online marketplaces?
At the start of the decade, free returns were a standard feature that most sellers on online marketplaces included in their offers.
However, the rising costs are forcing sellers to rethink their returns policies in order to remain profitable. These costs involve much more than just the total return overhead, as sellers must hire additional staff to review, replace the original packaging, and restock each item their customers return.
Additionally, sellers on eBay and other vast online marketplaces may incur losses due to refunds, payment processing fees, restocking fees, administrative tasks, merchandise devaluation, issuing free return labels, and countless other factors.
Despite this, many online platforms, including eBay, still favor product listings that include free returns. Moreover, eBay’s Cassini algorithm uses free returns as a ranking factor, meaning that offering free returns can improve the visibility of the seller’s listing and help increase their sales.
Also, free returns can help build trust and brand loyalty, since a considerable number of consumers claim they’re more likely to buy from the same online store if they had a seamless return experience the first time they purchased an item from a seller.
The most common reasons online shoppers return products
It’s clear that abandoning free returns altogether can be a costly mistake most ecommerce businesses can’t afford, despite the high costs.
So, even though offering free return shipping increases the number of items customers return and sometimes leads to exchange requests and even abuse, charging return shipping fees may not be the best path forward for most online retailers.
Instead, focusing on reducing the return rates may provide the perfect balance between customer satisfaction and profitability. However, to achieve this, sellers must first understand why their customers choose to return the products they purchase.
Here’s a quick overview of the common reasons for most returns:
- The customer ordered the wrong product or an incorrect product size.
- The retailer delivered the wrong product or an incorrect product size.
- The product wasn’t delivered on time.
- Buyer’s remorse.
- The product description was inaccurate.
- Fraud-related returns.
Considering these factors while drafting your store’s returns policy and creating product listings can considerably lower the return rates, as it allows you to include additional information potential buyers may need while making the purchasing decision.
Understanding how free returns impact your online business
Paying attention to the advantages and disadvantages of free returns and how they may impact your online store will allow you to create a returns policy that best fits your business needs.
For instance, returns usually spike after the holiday season, as millions return unwanted gifts, straining ecommerce businesses during this time frame.
Seasonality isn’t the only factor that can affect your online store’s return rates. Listing localization (for cross-border sellers) or product category can also profoundly affect how frequently consumers return items they purchase from your store.
Moreover, a high level of transparency regarding the return policy increases the likelihood of sales, since figures indicate that 66% of online shoppers review a seller’s return policy before buying one of their products.
Approximately 20% of consumers who frequently shop online say that free returns don’t affect their purchasing decisions.
Hence, it’s paramount for ecommerce businesses to evaluate the positive and negative impact that offering free or paid returns can have on their revenue, customer loyalty, and ultimately brand image.
Free returns as an online business growth driver
Opting to cover the costs of free returns can be a viable business strategy, especially for retailers who are still trying to establish themselves in a new niche or marketplace.
Aside from fostering repeated purchases, free returns also make shoppers more confident to place high-value orders, as they know they won’t have to cover return fees if anything goes wrong, and that they’ll get a full refund.
Consequently, a well-crafted returns policy can be a key growth driver, especially if the listings a business creates are properly localized and provide truthful descriptions of the seller’s products.
What’s more, many consumers consider free returns an integral part of the overall shopping experience, so making the entire shopping process from product discovery to returns seamless can have a major impact on a seller’s success on an online marketplace.
In addition, reducing the cart abandonment rate and a higher volume of customer data are also among the impactful benefits for businesses that opt to offer free returns.
The downsides of offering free returns
The availability of free returns has opened doors for bracketing, wardrobing, and other costly trends that are driving the return rates up, creating logistical challenges and limiting the profitability of online stores.
A high volume of free returns also creates significant environmental challenges due to increased greenhouse gas emissions and waste levels.
Most importantly, online sellers face considerable costs as they must cover the expenses of return postage, processing labor, restocking, refunds, and inventory management, to name a few.
These expenses are manageable as long as return rates are low. However, the average return rate in the ecommerce industry hovers just under 25%, and in some product categories, like footwear or clothing, it goes up to 40%.
These statistics indicate that online sellers can lose nearly half of their sales due to free returns, as the returned items are usually resold at a fraction of their final sale price, which severely limits the store’s profitability.
However, the benefits of free returns far outweigh their downsides, especially for sellers on eBay and similar platforms that use free returns as a ranking factor for product listings.
Enabling customers to return items for free is a powerful brand loyalty tool that can help digital retailers offset the costs of free returns through repeated purchases, increasing order value, and creating an overall smooth shopping experience for consumers that they would recommend to others.
Growing your ecommerce business one free return at a time
Creating informative product listings, high-quality photos, and videos of the products you add to your store, offering a simple exchange process for items purchased from your online store, and limiting the return window remain some of the most effective remedies for the rising costs of free returns.
What’s more, ensuring that your standard returns policy, listing all the fees, if any, and exceptions, is readily available, via QR codes or other methods, to all shoppers who come to your online store will enable you to set expectations from the start and avoid potential misunderstandings further down in the shopping process.
In addition, you should entrust your store’s free returns to a credible provider that consumers know and trust. Do you need help managing returns in your eBay store?
Contact us to find out how Webinterpret’s Returns solution can boost your store’s performance on domestic and international marketplaces.
About Webinterpret
Webinterpret supports merchants selling on eBay.
Our AI-based solutions enable more effective selling through automated listing localization, advertising, and returns and ensure all products placed on EU markets are GPSR-compliant.
By giving your international customers a full, end-to-end local shopping experience, Webinterpret improves your conversion and helps establish your business globally.
