Those New Online Returns Fees Are Driving Away Shoppers

New fees for online consumers to send back goods appear to be cutting back on returns as retailers had hoped, but they could also be costing companies customers heading into the holiday season.

About a third of companies surveyed by logistics company Happy Returns say they have lost customers since they began charging consumers fees to return items that they purchased online. That suggests merchants are seeing a backlash even as more than half of them say the tactic has slowed the flood of goods they have seen coming back into their warehouses over the past three years.

Tom Enright, an analyst at research firm Gartner, said retailers risk alienating customers with the charges as the busy holiday shopping season approaches, when returns often peak alongside increasing sales. Retailers last year expected nearly 18% of merchandise sold during the holiday season to be returned, according to the National Retail Federation.

“By bringing in a returns fee, you’re at very best going to lose customers” as a retailer, Enright said. “You’re certainly not going to gain anyone because you won’t attract people to buy from you by making it more expensive for them to do so.”

Returns have long been a concern for retailers but most have been willing to absorb the extra shipping and logistics costs because they saw it as crucial to help attract customers and build sales volumes.

Many merchants have been rolling out the extra charges, however, since the surge in e-commerce sales at the onset of the pandemic in 2020 pushed enormous volumes into home-delivery networks and began weighing more heavily on profits. Consumers during the pandemic got used to ordering items such as apparel in several sizes and colors at once to try on at home, sending back whatever they didn’t like.

Shoppers returned about 16.5% of items they purchased online in 2022, up from 9.6% in 2019, according to data from Appriss Retail and the National Retail Federation.

The returns trigger more shipping, warehousing and labor costs to process returned packages, evaluate the condition of the items and restock goods where possible. Companies can lose some 50% of their margin when customers return items, according to Gartner.

Retailers are looking at various tactics to limit the practice. Those include alerts to shoppers about items that are frequently sent back, online tools to help consumers see how apparel will fit them, and discounts when customers agree in advance to keep whatever they buy.

Amazon.com and fast-fashion retailers H&M and Zara are among those that have started charging return fees. Some also try to press shoppers to bring items back to stores where they might buy something else and retailers can process the returns in bulk.

Happy Returns said its survey found 81% of retailers implemented some form of return fee within the past year, including for mailing items back and for home pickup.

The fees are often relatively low and don’t cover the full cost of processing returns, experts say.

Amazon charges a $1 fee when shoppers choose to ship returns through United Parcel Service rather than dropping off the items at certain stores. H&M charges $5.99 to send items back through the U.S. Postal Service and eliminates the fee for members of its loyalty program. Zara has a $3.95 fee to mail back returns.

A recent survey by supply-chain software provider Blue Yonder said 59% of consumers reported tighter return policies such as return fees have deterred them from making a purchase.

Write to Liz Young at liz.young@wsj.com