Should H&M Have Joined the Bandwagon Exiting Free Online Returns?

H&M has become the latest fashion retailer in the United Kingdom to charge to return online purchases amid a broader push across retail to tackle escalating return costs.

The world's second-biggest fashion retailer told The Guardian it began charging customers £1.99 for each returned package in the U.K. this summer, joining rivals like Zara, New Look, Uniqlo, and Next.

“H&M’s online returns policy varies from market to market,” the Swedish retailer said in a statement to Fortune. “We strive to help our customers find the right size and fit from the outset, in order to reduce the returns rate.”

“It's a sensible thing to be doing," Jonathan De Mello, founder of the consultancy JDM Retail, told the BBC. "It makes economic sense, as it discourages shoppers from bulk buying online products and then returning the majority of them. That's been a real problem for companies."

In the U.S., H&M has been charging $5.99 for online returns, although they’re free for members of the chain’s free membership program.

Other brands charging for mailed returns in the U.S. include:

• Uniqlo charges $7
• Urban Outfitters charges $5
• Foot Locker charges $6.99
• J.Crew charges $7.50
• L.L.Bean charges $6.50
• JCPenney charges $8
• Zara charges $3.95
• REI charges $5.99

Additionally, Kohl’s and Belk customers are responsible for their own return shipping costs.

Those still covering shipping for online returns include many prominent names, such as Target, Walmart, Best Buy, Nordstrom, Lowe’s, Costco, Sephora, Apple, and Gap. Free returns, while costly, remove a barrier to making an online purchase.

Macy’s return shipping costs are free for Star Reward members and $9.99 for non-members.

In April, Amazon reportedly began charging a $1.50 fee when some customers drop off product returns at a UPS location instead of a nearby Amazon Fresh, Kohl’s, or Whole Foods. On its returns website page, Amazon states, “All return-eligible items, weighing under 50 lbs and sold by Amazon, have at least one free return option.”

In 2022, returns cost retailers about $816 billion in lost sales, according to the National Retail Federation’s annual study, with the average rate of return remaining flat at 16.5% compared with 16.6% in 2021.

Beyond charging for the shipping costs, retailers are also offsetting the cost of returns by shortening return windows, partnering with return aggregation services like Happy Returns and Narvar, increasing free shipping thresholds to eliminate impulse purchases, and using fit technology to reduce sizing errors.

A PowerReviews survey of over 9,000 U.S. adults fielded in November 2022 found that “87% of consumers would be at least a little likely to stop shopping with a brand or retailer that stopped offering free returns; 39% would be very likely to do so.”