7 things retail brands need to know about online returns in 2025

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Online shopping has transformed the retail landscape, offering customers convenience and flexibility like never before. But there’s a growing problem lurking behind the scenes—returns. In 2024, the total cost of online returns in the UK is expected to surpass £27 billion, putting immense financial and operational strain on retailers (Fig. 1). With consumer behaviour evolving and return rates climbing, retailers must rethink their approach to managing returns before profitability is further eroded.

1. The cost of returns is rising fast

Ecommerce has made it easier than ever for customers to return products, but this convenience comes at a steep cost. The latest research from ZigZag and Retail Economics highlights how returns are affecting profitability:

• £27.3 billion – the estimated value of online returns in 2024, as ecommerce continues to grow.
• 1 in 5 online purchases is returned, with the highest return rates in clothing, footwear, and beauty products.
• Up to £10-£20 per return is the estimated processing cost for retailers, factoring in logistics, repackaging, and lost sales.

Returns not only eat into profit margins but also create logistical bottlenecks. Unlike a straightforward sale, a return triggers a complex and costly reverse supply chain, from customer support to repackaging and restocking. Worse still, some items never make it back to shelves, particularly in the fast-fashion sector, where returned stock often misses peak sales periods, leading to markdowns or waste.

Fig 1: Proportion of online returns forecast to hit £27.3 billion in 2024

Source: ZigZag, Retail Economics

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2. Online returners can be categorised into 4 groups

Not all customers return products in the same way. Our research categorises returners into four distinct groups with differing characteristics:

1. Occasional Returners (43%) – Only return when necessary, making them the least costly segment for retailers.
2. Efficient Returners (31%) – Return quickly and in good condition, minimising disruption to stock cycles.
3. Serial Returners (11%) – Frequently over-order with the intention of returning many items, driving up costs.
4. Slow Returners (11%) – Delay their returns, increasing the risk of inventory obsolescence and missed sales opportunities.

Together, serial and slow returners make up only 22% of shoppers but generate nearly 50% of total returns. This behaviour is particularly problematic in fashion retail, where unsold stock quickly becomes outdated.

We asked our returns experts to curate some advice for battling serial returners and slow returners. Whilst both returners have a serious impact on your bottom line, and some of the advice for reducing your return rates is universal, the groups have plenty of differences.

Retailers need to get to the heart of why their customers are returning by analysing return reason codes, customer feedback and reviews, and utilising data services such as ZigZag’s Returns Reporting Hub.

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3. Bracketing, wardrobing, and return fraud behaviours

The rise of ‘opportunistic’ shopping behaviours is further compounding the issue. Customers are increasingly engaging in practices that drive up return rates. We’ve outlined the types of returns abuse and fraud that retailers need to be wary of and provided some content that will help combat the practices:

• Bracketing – Ordering multiple sizes or colours with the intention of returning most of them (common among younger shoppers).  
• Wardrobing – Buying items, wearing them once (for a social event, for example), and returning them as ‘unused’. ‍
• Staging -Buying items to wear on social media for ‘clout’ before returning them for a full refund.
• ‍General returns fraud – Keeping an item after receiving a refund or exploiting loopholes in return policies.

These behaviours are particularly common among Gen Z and Millennials, with 46% of younger shoppers choosing payment methods like buy now, pay later (BNPL) if they think they might return their order. This makes managing returns even more challenging for retailers.

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4. Paid returns are on the rise

Retailers are beginning to implement paid returns policies as a deterrent. Fashion brands like HCM and Zara have introduced return fees, typically between £2 and £3, to recover some of the costs. However, the effectiveness of these policies depends on customer tolerance – while nearly half of online shoppers say they would abandon a purchase due to unfavourable return policies, serial returners are the least likely to be deterred by return fees.

65% of retailers charged for all or part of their returns. That means they whilst they might not charge for all returns, they charge for premium collection services or paperless services. Many retailers have also moved to fully paid online but offer free in-store returns.

In total, over peak season 2024/25, 52% of all returns that headed back to the retailer were covered by the customer. Of course, the true cost of returns likely far exceeds the nominal fee paid for by customers, but it likely at least covers the delivery cost of getting the goods back.

There’s not a singular way of introducing paid returns. Retailers should consider a segmented approach to returns management:

• Incentivise efficient returners with perks like additional store credit or free returns for those who return items quickly.
• Discourage serial returners with return limits, restocking fees, or eligibility for store credit instead of refunds.
• Encourage sustainable returns by offering incentives for in-store returns or implementing eco-friendly return programs.

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5. How to reduce returns and their cost without charging customers

Charging for returns might seem the most simplistic and straightforward approach to recouping the cost of the returns on paper. However, retailers risk upsetting customers and need to put the work into setting the correct fee. There are plenty of other methods retailers can use to lower returns and their cost without switching to paid returns.

To navigate this challenge, retailers should consider a segmented approach to returns management:

• Include video content – Nothing paints a better picture than a video, particularly with clothing. Customers can see how the fabric moves, grips, and looks on models, resulting in more considered purchases.
• Update product descriptions – knowledge is power. Give customers the information they need to make an informed decision and get the product the want and expect.
• Live Exchanges – An issue with sizing is still the main reason customers make a return. Live Exchanges allows customers to swap their product for another in a different size thus saving the sale.
• Better tracking - reducing "where is my refund" enquiries will reduce customer service team enquiries and reduce cost.

We put together an informative article on the 10 ways to reduce ecommerce returns and their cost. So, there’s plenty of ways you can ensure your business doesn't heavily contribute to that hefty £27.3 billion figure.

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6. Customers want multiple return methods

Long gone are the days where retailers put a pre-paid returns label in a box from a specific carrier, or for retailers to rely solely on the Post Office. Whilst of course, free returns are still welcomed and the Post Office remains a slight favourite of consumers, the landscape has shifted.

Consumers have always wanted convenience but now they demand it. With the explosion of flexible working conditions, consumers now have different requirements each day of the week. If they want to return on a Monday (the most popular day typically to process a return) but they work from the office, they might require a locker or convenience store on the way to the station. On a weekend they might be available for a home collection or want to make a shopping trip of it and head to the retailer’s store.

It is vital retailers offer a myriad of return options, otherwise they risk customers prolonging their returns or getting so frustrated with the process you permanently lose their business. Here are the big five to offer:

• Post Office drop-off - In 2024, 28% of consumers said their ultimate choice to return an online purchase is through a Post Office in the UK. Although nearly 60% of customers regularly use it to make a return.
• Home Collection - Home collection has is the second most popular return method, with 27% of shoppers stating it’s their favourite option. The convenient returns option is popular amongst remote-working employees but is rarely offered for free by retailers.
• Convenience Store and Parcel Shop drop-offs - Whilst 16% of customers state it is the option they look for first when selecting a returns carrier option, it has started to lose some of it's volume to locker drop-off.
• Locker drop-off - This Lockers are another easy way to make a return. All you need is a QR code, and you can head down to a local locker, often near train stations, large supermarkets, or in town centres. During peak season 2024/25, lockers overtook convenience store and parcel shop drop-offs in returns volume. Lockers grew by 112% and now get about a fifth of returns back for ZigZag's retailers.
• Return to Store - The final option is to encourage people to return in your own stores. Of course this is only relevant to some retailers, but it’s a fantastic way to bolster footfall and drive sales

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7. Technology and sustainability will affect the future of returns

As returns continue to strain retail profits, technology will play a key role in reducing unnecessary returns. Virtual try-ons, AI-driven size recommendations, and enhanced product descriptions can help customers make more informed purchasing decisions. Likewise, return tracking and automation can streamline reverse logistics and reduce costs.

Sustainability will also be a defining factor in how retailers approach returns in the future. The environmental impact of returns is becoming a growing concern, yet only 30% of consumers prioritise sustainability when choosing a return method. Retailers can help shift consumer behaviour by:

• Offering consolidated returns to reduce emissions.
• Providing refurbishment and resale options for returned products.
• Educating consumers on the environmental impact of excessive returns.

Final thoughts

The era of free and frictionless returns will likely come to an end because of the economic and environmental pressures. As the cost of returns continues to rise, retailers must take proactive steps to manage return rates while maintaining customer satisfaction. The key lies in understanding consumer behaviour, leveraging technology, and implementing smarter returns policies that balance convenience, profitability, and sustainability.

The cost of doing nothing is simply too high as competition is fierce. With online returns forecasted to hit £27 billion in 2024, retailers that fail to act will continue to see profits eroded by this growing challenge.

We started the blog stating returns were a problem. But a problem with a solution that’s been around for 10 years, and counting, is not really a problem anymore. ZigZag can turn returns into a profit-driver, a chance to impress and delight customers, and become an avenue for smarter data collection that informs supply chains and makes your business more efficient.

Returns are only a problem if you let them be one.

Download your own copy of the Annual Returns Report 2024

Get in touch with ZigZag

Contact us to explore how we might be able to assist you with your online returns.