The Tamesis
Returns, which drain profitability, are such a pervasive problem for retail that some companies have begun taking a more aggressive approach, banning customers for bad behavior and charging fees for returns. Is there a better way?
Part of the problem stems from learned behavior. For years, many retailers have trained shoppers to expect fast shipping, long return windows and free refunds. These policies can help drive conversions, especially as e-commerce accelerates during the pandemic. But the costs of maintaining this level of flexibility have risen dramatically, from logistics and restocking to fraud and lost full-price sales.
The 2025 holiday season and the wave of January returns that follow bring another stress test. Salesforce reported a 10% year-over-year return increase from the end of the 2024 holiday season through the same period in 2025. “Return is a balance sheet issue and we’re still stuck in it,” said Caila Schwartz, director of consumer insights at Salesforce. At the same time, consumer behavior is changing, with many using generative AI tools like ChatGPT and Gemini to research products and social media for discovery, Schwartz noted. This can lead to impulsive and last-minute purchases, she said, which can impact returns: Salesforce found that items purchased in the last four days before Christmas were most likely to be returned. The National Retail Federation predicts that by 2025, the value of merchandise returned by customers will reach $850 billion.
While a flexible return policy can attract customers, a poor experience can turn them off. Nearly all (93%) consumers say a poor return experience makes them less likely to buy from a brand again, according to Salesforce. Against this backdrop, retailers are reassessing whether policy changes alone can effectively address the problem. Experts say the best strategy is prevention, especially as emerging artificial intelligence technologies begin to shape fit, sizing and product selection in the early stages of the customer journey.
policy and prevention
Over the past few years, retailers have been tightening previously lax return policies, from shortening deadlines to charging fees, in an effort to curb abuse and recoup costs. “Consumers still crave fast shipping, free returns, and relaxed exchange policies, but most retailers are starting to roll back these policies because they simply can’t afford to provide them to all customers,” said Woodrow Levin, co-founder and CEO of returns and exchange platform Extend. “Today, retailers are unable to separate their most valuable customers from policy abusers and are forced to push for stricter, less favorable policies for everyone.”
However, this risks alienating customers. Last year, Asos unexpectedly deactivated the accounts of some shoppers who had a high rate of returns. The backlash was swift, especially from plus-size customers who said they often had to buy multiple sizes to find the right fit (a practice known as “bracketing”). Then, earlier this month, Asos launched a more transparent tool that makes it clear to customers that those with return rates below 70% will continue to benefit from free returns. At the same time, customers with a return rate of more than 70% will face a restocking fee of £3.95 if the goods in their order are worth less than £40; customers with a return rate of 80% or higher will pay an additional restocking fee of £3.95 in addition to the restocking fee.
Salesforce’s data shows that policy changes are possible, but only if they are communicated clearly and early. “Consumers can tolerate it as long as they understand it before buying,” Schwartz said.
But both Schwartz and Levine point out that prevention — rather than post-purchase punishment — is a more sustainable lever. This includes better fit tools, more accurate product data, and more proactive buying guidance. according to a fashion business A survey of nearly 700 consumers showed that 38% said they often return clothes because they don’t fit, while 91% said their clothing sizes change depending on the brand they buy.
